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IMF warns Hungary that it will not tolerate rise in deficit to 7% of GDP

The International Monetary Fund (IMF) warned Hungary on Wednesday that the organization would not tolerate a rise in the country's budget deficit to 7% of GDP, Dow Jones reported.

Opposition party Fidesz, the likely winner parliamentary elections to be held this spring, has predicted that Hungary's budget deficit could swell to 7%of GDP in 2010. The IMF is in contact with Fidesz about budget-calculation methods and is open to talks with the new government after the elections, IMF Resident Representative in Hungary Iryna Ivaschenko told Dow Jones Newswires in an interview.

“The views are still developing. But we have been in contact with Fidesz, as always, and now our message to the opposition is that it's really important to keep policy continuity, for confidence. As regards the numbers, it is important to understand what numbers and what definitions we are talking about,” Ivaschenko said.

The IMF's representative in Hungary noted that “the definitions are not always comparable, so you should not compare the 3.8% (of GDP) with the 7%. You cannot say they are not right, but it is comparing apples and oranges.”

“Under the current projections, we have projected that the public debt to GDP ratio would start declining next year. And if you upset the deficit for just one year, it would undermine this reduction in the public debt to GDP ratio, and this is very important to Hungary,” Ivaschenko added. (MTI – Econews)