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Freezing stability reserves will keep 2011 budget on track, economy ministry state secretary says

The government will meet its 2011 deficit target of 2.9% of GDP as the freezing of a HUF 250 billion stability fund established earlier this year will neutralize the HUF 200 billion-HUF 220 billion risks, Ministry of National Economy State Secretary Gyorgy Naszvadi said on Monday.

Economy minister Gyorgy Matolcsy said ten days earlier he would propose the Prime Minister to make the freeze permanent citing global risks. The HUF 250 billion -- just under 1% of GDP -- fund has been aside from expenditures budgeted for 2011 as a buffer against unforeseen external shocks, with the suspension to be reviewed late 2011.

Although the cash flow based central government deficit surpassed the full-year target during the first three months, the HUF 529 billion arriving current budget revenue from assets transferred to the state for those returning from the private pension funds as well as from extraordinary taxes coming in the remainder of the year will improve the balance, Naszvaid told Parliament's budget committee on Monday.

Data of the ministry showed that Hungary's January-March cash flow based central government deficit reached HUF 742.1 billion, or 108% of the HUF 687 billion government's 2011 target.