The Maastricht economic criteria for joining the eurozone were less appropriate for emerging economies, the Hungarian central bank's president said Tuesday.
András Simor told reporters Hungary was determined to join the Eurozone. “On the Maastricht criteria, I believe there is a lot to be said. ... The criteria might not be as appropriate for emerging economies as for the more developed ones,” Simor told a group of international reporters in Budapest.
“I believe that Hungary is a country that would like to join the Eurozone. I, as the governor of the central bank, I don't believe my role is to try to criticize those criteria but rather to make sure that we meet the criteria,” Simor said. Simor said he is driven to reach all requirements needed for the country's currency switch. “Looking at today's data we would need to bring inflation lower than 3% and we will do whatever is necessary to achieve that goal.”
Simor said Hungary was on target to reduce its budget deficit to the 3% of GDP level required for the euro by 2008-2009. Simor noted at times there was lack of harmony between the views of the government and the central bank but that the two bodies were debating their standpoints regularly. He said the government was committed to meeting targets for adopting the euro and that balancing the budget was “going to be more concentrated on expenditure cuts. I very much hope this is going to be the case,” Simor said. Simor said the Hungarian currency, the forint, was strong, supporting price stability.
Hungary's deficit was 9.2% of GDP last year - well above the 3% limit set for countries using the euro. After posting the largest budget deficit in the European Union in 2006 - 10.1% of GDP - the government is aiming for a 6.8 to 6.6% figure for 2007.
Experts say the country would likely not be ready to adopt the euro until 2015 due to the large deficit and high inflation, expected to be near 9% this year. Hungary's central bank in June cut base interest rates by 0.25% to 7.75%. (pr-inside.com)