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Almunia: Hungary will overcome difficulties of crisis

  EU Commissioner for Economic and Monetary Affairs Joaquin Almunia said Hungary would successfully overcome the difficulties of the global crisis, and the consolidation of its public financing would help to strengthen the economy, speaking on Hungarian public television on Sunday.

Almunia acknowledged the progress Hungary has made in reducing its general government deficit over the past three years, but said the process must continue. The joint target for 2009 is achievable, he added. The EU, International Monetary Fund and World Bank are cooperating to provide a €20 billion credit line to Hungary to support its economy.

Asked whether there is a real danger that Hungary could default, Almunia said, “We do not need to augur like Cassandra, we do not need to guess when the crisis will end, we simply have to solve these difficulties.”

He added that Hungary has problems just like other countries, but these should not be allowed to pile up. The problems are serious, but they can be handled, and that is what the EU is doing together with the Hungarian government.

Almunia said he had held talks with the Hungarian government on questions of public financing as well as budget expenditures and revenue. The fiscal consolidation creates room for investments, which are very important for the Hungarian economy, he added.

EU member states face significant challenges, but this can be handled now from a much easier position as there is unity in the EU and it has the necessary instruments to manage the crisis, instruments such as the cohesion and structural funds of the European Investment Bank, Almunia said.

“I do not believe that the EU will split in two, that is nonsense,” he said. “I think we cannot accept that there is currently a situation in which the EU could split in two, or that there is the threat of sovereign default,” Almunia said. “We are making serious efforts and we have the means, so we are sure it will be successful.”

Speaking about the weakening of the forint and other currencies in the region, Almunia said the biggest help for the currencies would be to get the financial market to operate normally. If the markets appropriately assess the positive stand taken by the leading officials of the countries in the region, there will not be a problem with the currencies, he added.

Almunia confirmed that the conditions for joining the euro zone would not be changed. Though there are some euro zone members that do not meet the criteria, that does not mean conditions for new euro zone members should be eased, he said. If Hungary follows its current economic path, the country could adopt the euro within a few years, he said. (MTI-Econews)