FACTBOX-Central Europe tightens 2007 budgets, Czechs lag

    Central Europe's European Union members' are set to bring 
their budget deficits closer to EU limits next year with the exception of the 
Czech Republic where fiscal gap will widen markedly. 
    Bulgaria and Romania, which join the bloc on Jan 1, 2007 are seen loosening 
budget reins next year but staying below the EU's cap of 3 percent of gross 
domestic product. 
    Czech and Slovak parliaments have already approved their 2007 fiscal plans. 
Polish deputies will vote on the bill on Friday before sending it to the Senate 
with a final vote due in January. Hungarian parliamentary deputies are due to 
vote on Dec. 19. 
    Slovakia is the only of the four EU members to aim for a gap below the EU's 
limit of 3 percent of gross domestic product next year, while Hungary, despite a 
sharp 3.3 percentage point reduction, will remain deep in the red. 
    Following are key points of the six nations' budget plans. 
    * Slovakia: Economists see a risk that expenditure may be boosted by up to 
0.4 percent of GDP because of spending commitments made in other legislation 
that were not included in the bill. The government says, however, likely faster 
economic growth than assumed in the bill should allow it to reach the overall 
deficit target. 
    * Czech Republic: Budget expenditure will jump by 31 billion Czech crowns or 
some one percent of GDP to finance road and other investment projects if the 
planned sale of a small stake in power company CEZ stalls. 
    * Hungary: Government tax hikes and spending cuts are seen curbing the 
deficit, by far the highest in the EU this year at 10.1 percent of GDP. The 
measures will slow economic growth and the main risk tax revenues will be hit 
more than assumed in the draft, though government growth and inflation forecasts 
are seen as conservative. 
    * Poland: Despite early criticism the budget's inflation and economic growth 
assumptions now look conservative, boding well for meeting of its targets. Net 
state borrowing is set to rise to 45 billion zlotys next year from 41 billion in 
2006 due to additional contributions to the reformed pension system. 
    *In Bulgaria and Romania a surge in state revenues in their booming 
economies makes forecasting budget figure difficult. Analysts expect Romanian 
MPs to approve the budget bill even though the cabinet has lost its majority in 
Parliament. 
    DEFICITS AND ECONOMIC ASSUMPTIONS IN THE REGION 
                 Czech Rep. Hungary  Poland Slovakia     Bulgaria  Romania 
 General government balance 
 (pct of GDP, ESA 95) 
 -2006               -3.5    -10.1    -3.9    -3.6        3.2-3.3   -2.5 
 -2007               -4.0     -6.8    -3.4    -2.9          0.8     -2.8 
 Revenue change 
 in 2007 (pct)        7.4      3.5*    8.0     7.1         16.8      N/A 
 Spending change 
 in '07 (pct)         8.6     -0.7*    7.0     7.9         14.7      N/A 
 GDP growth ** 
 -2006                6.0      4.1     5.5     6.6          6.1    7.5-8.1 
 -2007                4.9      2.2     4.6     7.1          5.8      6.4 
 Average CPI *** 
 -2006                2.8      3.5     1.4     4.5          7.7      5.5 
 -2007                3.0      6.2     1.9     3.1          4.4      4.5 
    NOTES:  
    * Hungary's deficit figures refer to the central government budget which is 
the biggest part of the overall public sector budget. 
    ** 2006 growth numbers are based on current estimates, 2007 figures are 
budget forecasts. In Slovakia growth expected to reach around 8 percent, in 
Poland seen at just above 5 percent. 
    *** 2006 figures based on current estimates, 2007 data from budget plans. 
    ((Compiled by Sandor Peto with contributions from Bratislava, Bucharest, 
Prague, Sofia and Warsaw; Reuters Messaging sandor.peto.reuters.com@reuters.net; 
+36 1 327 4744)) 
  Keywords: CENTRALEUROPE BUDGETS/  
    

[Reuters/Finance.cz]