Hungary pledges to cut budget deficit to 1.9% by 2008

Hungary told the European Commission it will cut its budget deficit to a third by 2008, enabling it to stick to a target of adopting the euro in 2010. The government aims to reduce the shortfall to 3.3% of gross domestic product in 2007 and 1.9% of GDP in 2008, according to Hungary's updated convergence report posted today on the Finance Ministry's Web site. The figures include an adjustment for the effect of private pension contributions. Prime Minister Ferenc Gyurcsány, who faces elections in six months, must cut the budget deficit to less than 3% of GDP two years before planned euro adoption. The size of the deficit has sparked criticism from the Commission and prompted speculation that the government will delay the target date. "Hungary's medium-term economic policy goal is to maintain a continuous fast pace of convergence, for which the steady and gradual reduction of the budget deficit is required," the government said in its report.