The government will recommend a 3.5% inflation target for the end of 2006, Finance Minister Tibor Draskovics announced

The Hungarian government will recommend a 3.5% inflation target for the end of 2006, Finance Minister Tibor Draskovics announced. Draskovics said annual inflation will be 6.8%–6.9% for 2004, and will continue to slow in 2005 to a yearly 4.5%. National Bank (MNB) President Zsigmond Jбrai said the 3.5% target for 2006 is feasible provided fiscal policy remains strict. 52.6% of revenue in the 2005 budget carries medium or high risk, the State Audit Office (БSz) found. The office said the government’s target for GDP growth of 4% in 2005 is realistic, but not without risk, and added that the general government deficit target of 4.7% of GDP is riskier. The office also said the 2005 budget is not detailed enough in its description of expenditures related to public-private partnerships (PPPs). The government plans to present an alternative to an БSz proposal that would force it to make a new budget if the original’s targets are exceeded by 2.5%. The government proposes allowing a 5% overshoot of budget targets. Forcing the government to create a supplementary budget would mean the new budget has to be approved by Parliament. The government issued Ђ1 billion in eurobonds, State Debt Management Rt (БKK) announced, saying it would use the issue to refinance debts maturing in 2004. The terms of the issue are the best of all government-issued eurobonds, the БKK press release stated. They mature in seven years, and pay annual fixed interest of 3.625%. The government earmarked Ft 17 billion (Ђ69 million) for housing subsidies in next year’s budget. The budget includes a Ft 3.4 billion allocation for a new type of rent subsidy aimed at young people with few financial resources. Another Ft 4 billion is set aside for a fund providing state guarantees for housing loans.