Table Of Content«
ECONOMICS
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Hungary e OECD
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Special Features: Structural Policies e Economic Surveys
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Coping with Ageing 2
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Latest Surveys Available "Partners in Transition"
Hungary
Australia, January 2000 Slovak Republic, February 1999
Austria, May 1999
Belgium-Luxembourg, January 1999 Non-Member Economies
Canada, August 2000 Baltic States, February 2000
Czech Republic, February 2000 Bulgaria, April 1999
Denmark, July 2000 Romania, February 1998
Finland, July 2000 Russian Federation, March 2000
ECONOMICS
France, July 2000 Slovenia, May 1997
Germany, November 1999
Greece, December 1998
Hungary, November 2000
O
Iceland, December 1999
E
Ireland, May 1999 C
Italy, May 2000 D
Japan, November 1999 E
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Korea, September 2000 o
Mexico, July 2000 n
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Netherlands, March 2000 m
New Zealand, April 1999 ic
Norway, February 2000 S
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Poland, January 2000
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Portugal, October 1999 e
Spain, January 2000 y
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Sweden, July 1999
Switzerland, July 1999 H
Turkey, June 1999 U
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United Kingdom, June 2000
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United States, May 2000 A
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www.oecd.org Y
ISSN 0376-6438 ISBN 92-64-17530-X
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2000, No.18 November 2000
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OECD
ECONOMIC
SURVEYS
1999-2000
Hungary
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION FOR ECONOMIC CO-OPERATION
AND DEVELOPMENT
Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and
which came into force on 30th September 1961, the Organisation for Economic Co-operation
and Development (OECD) shall promote policies designed:
– to achieve the highest sustainable economic growth and employment and a rising
standard of living in Member countries, while maintaining financial stability, and
thus to contribute to the development of the world economy;
– to contribute to sound economic expansion in Member as well as non-member
countries in the process of economic development; and
– to contribute to the expansion of world trade on a multilateral, non-discriminatory
basis in accordance with international obligations.
The original Member countries of the OECD are Austria, Belgium, Canada, Denmark,
France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United
States. The following countries became Members subsequently through accession at
the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969),
Australia (7th June 1971), New Zealand (29th May 1973), Mexico (18th May 1994),
theCzech Republic (21st December 1995), Hungary (7th May 1996), Poland
(22ndNovember 1996) and Korea (12th December 1996). The Commission of the
European Communities takes part in the work of the OECD (Article 13 of the OECD
Convention).
Publié également en français.
© OECD 2000
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Table of contents
Assessment and recommendations 9
I. Recent trends and prospects 25
Overview 25
Growing exports contribute to an acceleration in GDP 25
Labour market conditions continue to improve 29
The disinflation process pauses temporarily 32
The external balance stabilises 36
The short-term outlook 43
II. Macroeconomic management 47
Monetary policy 47
Fiscal policy 57
Assessment 75
III. Progress in structural reform 79
Product markets 85
Financial markets 97
Labour market policy 112
Public sector 124
IV. Coping with Ageing 155
Introduction 155
The scale of the demographic problem 155
Public support for the elderly 161
The economic implications of ageing under existing institutional arrangements 172
Policy priorities 185
Summing up 194
Notes 198
Glossary 208
Bibliography 210
© OECD 2000
4 OECD Economic Surveys: Hungary
Annexes
I. Operations of the NBH 214
II. General government accounts: cash-flow versus accrual concepts 217
III. Potential output growth until 2005 218
IV. Medium-term projections 220
V. Calendar of main economic events 222
Statistical Annex and Structural Indicators 225
(cid:127)(cid:127)(cid:127)(cid:127)(cid:127)
Boxes
1. The government’s2000 anti-inflation programme 36
2. Accounting for trade on an accruals basis in the balance of payments 42
3. Changes in the compulsory reserve requirement 55
4. Off-budget quasi-fiscal instruments 58
5. The Széchenyi plan 72
6. Postabank 101
7. Non-bank credit institutions 105
8. Chronology of major tax reforms 125
9. Tax policy and EU accession 142
10. Managed-care pilot project 147
11. The impact of different demographic assumptions 160
12. The social-security pension system 169
13. The privately managed pension funds 173
14. The Romani minority 191
15. Increasing prosperity in an ageing society: an overview of recommendations 195
Tables
1. Quarterly gross domestic product 27
2. Quarterly gross domestic product bysector 29
3. Regional labour market developments 31
4. Earnings peremployee 32
5. Current account ofthebalance ofpayments 40
6. Merchandise trade balance onacash-flow andaccruals basis 41
7. Financial account ofthebalance ofpayments 43
8. Capital flows inthebalance ofpayments 44
9. Short-term projections 45
10. Money andcredit 56
11. Alternative measures ofthegeneral government balance 60
12. General government accounts, OECD basis 61
13. Gross public debt 62
14. Consolidated general government revenue andexpenditure, OECD basis 64
15. Central government accounts – unconsolidated, GFS basis 67
© OECD 2000
Table of contents 5
16. Balance ofthesocial security funds, GFS basis 69
17. Local government accounts, GFS basis 70
18. The medium-term budget outlook 73
19. Structural surveillance 80
20. Companies managed byÁPV Rt., bysector 86
21. Geographical breakdown oftrade flows 90
22. Outstanding loans byrisk category 101
23. Pre-tax net earnings inthebanking sector 102
24. Breakdown ofbanking assets byownership 103
25. Central andeastern European stock markets 106
26. Monthly earnings byeducational attainment intheprivate andpublic sectors 115
27. The structure oftaxation bytype oftax 127
28. Social security contributions oftop wage earners 130
29. VAT productivity andeffective VAT rates 131
30. Tax incentives 133
31. Required pre-tax rates ofreturn tocapital inmanufacturing (cost ofcapital) 135
32. Tax arrears 138
33. Fertility andlife expectancy 156
34. Participation inmandatory private pension funds 167
35. Growth rates ofemployment, productivity andGDP 176
36. Membership andassets ofHungarian pension funds 177
Annexes
A1. Instruments oftheNBH applied onaregular basis 215
A2. Sensitivity analysis 219
A3. Direct costs oftax andspending measures 221
Statistical Annex and Structural Indicators
A. Selected background statistics 226
B. Supply anduse ofresources 227
C. Labour market indicators 228
D. Costs andprices 230
E. Monetary indicators 231
F. Balance ofpayments 232
G. Financial markets 233
H. Non-financial corporations withdouble entry book-keeping 234
Figures
1. Macroeconomic performance 26
2. The climate in the private sector 28
3. Employment, unemployment and the labour force 30
4. Consumer price developments 33
5. Components of inflation 35
6. Trade performance 37
7. Customs versus balance of payments trade data 38
8. Cumulative current account deficit 39
9. The Forint in its fluctuation band 48
© OECD 2000
6 OECD Economic Surveys: Hungary
10. Interest rate developments 50
11. Monetary conditions 51
12. Yield curves 53
13. Exchange rate interventions 54
14. Cumulative central government balance 63
15. Foreign direct investment by region 88
16. Real credits 98
17. Sectoral interest rates 100
18. Liquidity of the Budapest Stock Exchange 107
19. Regional stock market indices 107
20. Regional labour markets 113
21. Wage drift 114
22. Minimum wage developments 116
23. The overall tax burden in OECD countries 126
24. Distribution of the implicit VAT subsidy 132
25. Average tax rates by level and type of income 136
26. Life expectancy 145
27. Population scenarios 158
28. Demography and employment 159
29. Employment/population ratios for men and women 162
30. Pension benefit recipients by type of benefit 164
31. Dependency ratios 178
32. Demand for health services 180
33. Social security deficit: sensitivity to employment and productivity growth 181
34. Social security deficit: sensitivity to demographic assumptions 183
35. PAYG balance with lower contribution rates 184
36. The evolution of healthcare supply 187
37. Sensitivity of the PAYG balance to revenue-enhancing reforms 192
© OECD 2000
BASIC STATISTICS OF THE REPUBLIC OF HUNGARY (1999)
THE LAND
Area (sq. km.) 93 036
Arable land (sq. km.) 47 080
THE PEOPLE
Population (thousands, end year) 10 043 Population of major cities (thousands):
Urban population (per cent of total) 64 Budapest 1 812
Rural population (per cent of total) 36 Debrecen 204
Projected population in 2005 (1995 = 100) 96 Miskolc 172
Employment (thousands) 3 811 Employment by sector (per cent of total):
Unemployment rate Agriculture 7.1
(per cent of civilian labour force) 7.0 Industry 34.0
Participation rate of 15-64 year olds 59.8 Services 58.9
THE PARLIAMENT
Parliament 386 seats
Number of political parties in Parliament 6
(elections of May 1998)
Share of seats held by governing coalition (per cent) 53
Next election 2002
PRODUCTION
GDP (Ft billion, current prices) 11 436.5
GDP per capita ($, average official exchange rate) 4 808.0
Consumption (private,per cent of GDP) 50.9
Gross fixed capital formation (per cent of GDP) 23.8
PUBLICFINANCE1
Central government budget balance (per cent of GDP) –2.9
General government revenue (per cent of GDP) 41.8
General government blalance (per cent of GDP) –3.7
FOREIGNTRADE
Exports of goods and services (per cent of GDP) 52.8
Imports of goods and services (per cent of GDP) 55.3
Official reserves (average, incl. gold, SDR billion) 7.1
Total gross external debt ($ billion) 29.3
Total gross external debt (per cent of GDP) 59.7
THE CURRENCY
Monetary unit: Forint Forints per $:
Official average, 1999 237.29
June 2000 273.66
1. Based on official Hungarian cash-flow accounts.
This Survey is based on the Secretariat’s study prepared for
the annual review of Hungary by the Economic and Development
Review Committee on 5September2000.
(cid:127)
After revisions in the light of discussions during the
review, final approval of the Survey for publication was given
by the Committee on 9October2000.
(cid:127)
The previous Survey of Hungary was issued in
February1999.
