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Hungary will meet euro-convergence criteria in four to five years, state secretary says

Prime Minister's Office State Secretary Mihály Varga said on a television program that Hungary will meet the euro-convergence criteria necessary for adoption of the single European currency by 2014 or 2015.

Varga asserted during the program that the government would not be able to meet the conditions of Hungary's November 2008 International Monetary Fund-European Union standby loan agreement, undertaken by the previous government, without introduction of its extraordinary banking-sector tax.

The extraordinary banking tax could be phased out in “2+1 years” in Varga’s hopes, adding that the government would utilize a unified European Union banking-sector tax in the third year instead of the extraordinary tax if the EU introduces such a levy by that time.

Varga said it was important to reduce the Hungary's risk premium keep the country's fiscal deficit under 3% of GDP in 2011.

The government decided last week it would keep next year's general government deficit under 3% of GDP. It decided to keep this year's deficit at 3.8% of GDP or at the target set by the previous government, in June. The targets are in line with agreement of the IMF-EU loan agreement as well as the latest, 2010 January update of the country's euro convergence program. (MTI – Econews)