Hungary’s parliament approved next year’s budget on Tuesday, expediting fiscal planning compared with earlier years as part of a push to regain an investment-grade credit rating.
The legislation received 119 votes in favor and 63 against. The budget foresees the deficit narrowing to 2 percent of gross domestic product from a planned 2.4 percent this year, with 2.5 percent growth in economic output for 2016. Personal income tax is set to drop by one percentage point to 15 percent.
Revenue from a special tax on banks will fall by 60 billion forint ($219 million) in an effort to encourage lending and ease the government’s conflict with the financial industry. The reduction softens a policy that contributed to Hungary’s slide into junk credit status just over a year after Prime Minister Viktor Orban came to power in 2010.
The forint gained 0.5 percent to 309.19 against the euro by 10:19 a.m. in Budapest, the strongest in three weeks.
Hungary is rated one step below investment grade at Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. Fitch raised the sovereign’s outlook to positive from stable in May, citing sturdier public finances and faster economic growth. Economic output has maintained an annual growth rate of more than 3 percent for the past six quarters after recovering from a contraction in 2012.