Hungary tries to head off deficit fear
By Krisztina Than and Marton Dunai |
June 7, 2010, Monday
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Print Edition
Print Edition
HUNGARY'S government is aiming to meet this year's budget-deficit target, seeking to draw a line under "exaggerated" talk of a possible Greek-style debt crisis unnerving global markets.
State Secretary Mihaly Varga, leading a review of the country's public finances, said in Budapest over the weekend that Hungary's previous socialist governments had hidden the true extent of the fiscal shortfall and that additional measures would be needed to reach the 3.8 percent of gross domestic product goal agreed with international lenders.
Analysts welcomed the government's intention to meet the target, which they said should calm markets somewhat today, although details were needed and any tax cuts should be offset by spending cuts.
The market consensus for this year's deficit is 5 percent.
They said the government would need to work hard to restore credibility following a spate of contradictory comments on fiscal issues.
Fears of a Hungarian debt crisis pushed the euro to a four-year low last Friday after a ruling party official said the country had only a slim chance of avoiding Greece's fate, and the prime minister's spokesman said he supported this view.
"Those comments are exaggerated, and if a colleague makes them it is unfortunate," Varga said.
"The situation is consolidated, and the planned deficit is attainable, but for it to be attainable the government must take measures."
He said some tax revenues were lower than planned in the current budget and several spending items higher or not included at all.
"We must state that the Bajnai government, similar to the Gyurcsany government in 2006, did not present a credible picture of the real state of the country," Varga said.
Varga told MTI news agency he trusted that decisions on the economy would be made today and made public either today, or by tomorrow morning at the latest.
He declined to give an estimate for the 2010 deficit but said the government did aim to meet the 3.8 percent target agreed with the International Monetary Fund and the European Union, which rescued Hungary from financial collapse in October 2008.
"Calmly, but firmly, we must prepare an action plan as soon as possible, a series of measures that can help us attain the deficit target," he said.
"The Hungarian economy needs immediate, urgent measures."
Hungary's center-right government, sworn in a week ago after winning elections in April, has so far not put forward a clear economic plan, saying only it wants to cut taxes and create jobs to boost growth.
State Secretary Mihaly Varga, leading a review of the country's public finances, said in Budapest over the weekend that Hungary's previous socialist governments had hidden the true extent of the fiscal shortfall and that additional measures would be needed to reach the 3.8 percent of gross domestic product goal agreed with international lenders.
Analysts welcomed the government's intention to meet the target, which they said should calm markets somewhat today, although details were needed and any tax cuts should be offset by spending cuts.
The market consensus for this year's deficit is 5 percent.
They said the government would need to work hard to restore credibility following a spate of contradictory comments on fiscal issues.
Fears of a Hungarian debt crisis pushed the euro to a four-year low last Friday after a ruling party official said the country had only a slim chance of avoiding Greece's fate, and the prime minister's spokesman said he supported this view.
"Those comments are exaggerated, and if a colleague makes them it is unfortunate," Varga said.
"The situation is consolidated, and the planned deficit is attainable, but for it to be attainable the government must take measures."
He said some tax revenues were lower than planned in the current budget and several spending items higher or not included at all.
"We must state that the Bajnai government, similar to the Gyurcsany government in 2006, did not present a credible picture of the real state of the country," Varga said.
Varga told MTI news agency he trusted that decisions on the economy would be made today and made public either today, or by tomorrow morning at the latest.
He declined to give an estimate for the 2010 deficit but said the government did aim to meet the 3.8 percent target agreed with the International Monetary Fund and the European Union, which rescued Hungary from financial collapse in October 2008.
"Calmly, but firmly, we must prepare an action plan as soon as possible, a series of measures that can help us attain the deficit target," he said.
"The Hungarian economy needs immediate, urgent measures."
Hungary's center-right government, sworn in a week ago after winning elections in April, has so far not put forward a clear economic plan, saying only it wants to cut taxes and create jobs to boost growth.
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