Czech Republic, Hungary, Poland Risk Budget Overshoots, EU Says

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Czech Republic, Hungary, Poland Risk Budget Overshoots, EU Says

The Czech Republic, Hungary and Poland all risk overshooting their budget-deficit targets next year, in part because of pension costs, the European Commission said in a report on public finances today.

The Czech Republic's shortfall may be 3.6 percent of gross domestic product rather than the planned 3 percent; Hungary's deficit may reach 4.9 percent instead of the targeted 4.3 percent; and Poland's budget gap may come to 3.3 percent, above the 3.1 percent goal, the report said.

The European Union's eastern members are working to join Slovenia, which this year became the only one of the countries that joined the bloc since 2004 to qualify for euro adoption. They need to cut their budget deficits to less than 3 percent of GDP to meet the criteria for the currency switch.

In Poland, ``if the costly annual indexation of pensions and social benefits, linked to wage growth, is restored, the general government balance can turn out worse,'' the report said. For Hungary, ``the forecast assumes that not all the planned freez3es of wages and operational expenditures are fully sustained in 2008.''

For both the Czech Republic and Hungary, the EU forecast disregards possible future government measures, the report said.

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