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Budget recalculation could require HUF 100bn or more in extra savings - paper

Hungary’s government may have to make an additional HUF 100bn in savings when recalculating next year’s budgets, analysts said in Monday’s issue of business daily Napi Gazdasag.

Prime Minister Viktor Orban said at the weekend that the 2012 budget bill would have to be recalculated because of a worse outlook for economic growth and the weaker forint. He said GDP growth would be 0.5% "at most" but added that the situation was "not as bad as it looks" because the budget bill contained a significant amount of reserves.

Concorde’s Janos Samu told the paper that if GDP stagnates next year, the government could use up all of the budget reserves and still not meet the 2.5%-of-GDP deficit target. To keep the deficit from widening to around 3% of GDP, at least HUF 100bn in additional reserves would be needed, he said. If the economy contracts, HUF 100bn-200bn on top of that would be necessary to meet the target, he added.

Andras Oszlay of Takarekbank also said the government had to find an extra HUF 100bn-200bn to keep the deficit under 3% of GDP.