Are you sure?

Hungary committed to cut deficit next year, chief PM advisor Szapáry says

The Hungarian government is committed to reducing the budget deficit further next year as well as carrying out structural reform measures, Prime Minister Orbán's chief economic advisor said Tuesday.

Hungary could set a target date for eurozone accession no sooner than in two-three years, news agencies cited him as saying in Bratislava.

“The government has decided that it (the budget deficit) will be lower than this year,” György Szapáry said about next year's budget at a conference organized by the Slovak central bank, Dow Jones reported.

The government repeatedly said it was committed to meet this year's general government deficit target of 3.8% of GDP but it fell short of committing itself to further austerity measures or to cutting next year's budget deficit to below 3% of GDP, as targeted in the convergence program prepared by the previous government. The refusal was thought to be the reason why a Hungary's regular review of the country's standby loan agreement with the International Monetary Fund and the European Union was left uncompleted in mid-July.

The government will target a 2011 budget shortfall that will still leave room for tax cuts to stimulate growth, Szapáry said, adding that it won't shy away from much-needed structural measures.

“There are structural reforms in the making in the areas of education, health and railways,” the advisor said.

In Szapáry's view Hungary will not be able to set a target date for adoption of the euro currency sooner than in the next two or three years.

The country has repeatedly missed earlier target dates, and it currently meets none of the Maastricht criteria for the adoption of the single currency.

“Right now we don't have a growing environment, and that's not going to be very soon,” Reuters cited Szapáry, reporing from the conference in Bratislava.

Hungarian central bank chief András Simor said last week that the economy should first get on a stable and sustainable path before entering the ERM-2 exchange rate mechanism, where applicants should spend a minimum of two years before adopting the euro. (MTI-Econews)