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Monday, November 13, 2006

Gas Subsidies To Go

This in principle is an intelligent move since there is no real justification for the use of such subsidies, the problem is though that all of this is happening at once, and someone, somewhere is going to have to pay these increases off a salary that isn't rising.

The Hungarian government plans to increase household natural gas prices by up to 72% as of January 2007 as part of its endeavours to cut budget subsidies, local broadsheet Népszabadság has reported. According to the paper, the cabinet is to replace universal consumption-based natural gas subsidies with subsidies that are targeted to low-income groups and based on per capita income.

The subsidy reduction is part of the government efforts to reduce gas subsidy spending from this year's HUF 160 billion to below HUF 120 bn in 2007.

While the price for the most needy will remain unchanged, the tariff for the first 1,500 cubic metres of gas consumed will go up by over 70% for high-income groups. The changes to be announced at the end of November affect some three million consumers.

The subsidy cuts are part of the government efforts to curb gas subsidy spending from this year's 160 billion forints to below 120 billion in 2007.

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