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Meeting deficit target will require further fiscal measures, says PM

Meeting the budget deficit target for this year will require further fiscal measures both on the revenue and the expenditure sides because of the effect on Hungary of the eurozone debt crisis, Prime Minister Viktor Orbán said at a press conference on Wednesday.

Decisions on these measures will be taken after a meeting of the parliamentary groups of governing Fidesz and alliance partner KDNP on September 7-9, Orbán said. The government will stand by its general government deficit target for 2011, bringing it under 3% of GDP, regardless of what happens, he added.

The government targets a general government deficit of 2.94% of GDP this year.

The government will continue to reduce state debt as well as implement changes to the tax system that make it simpler and proportional, Orbán said.

Speaking a day after fresh data was released that showed Hungary's economy grew at a slower than expected pace in Q2, Orbán said GDP growth this year would be around 2%, one percentage point less than earlier thought, resulting in a gap of at least HUF 100 billion.

Hungary projected GDP growth of 3.1% in its updated convergence program submitted to Brussels in April.

Hungary's GDP rose an unadjusted 1.5% in Q2 from the same period a year earlier, slowing from 2.5% growth in the previous quarter, the Central Statistics Office (KSH) said in a preliminary estimate early Tuesday. Analysts had put GDP growth for the period at 2.1-2.3%.

Hungary is not out of the danger zone yet, but ordinary people cannot be allowed to pay the price of the crisis, Orbán said, adding that the government was launching a campaign to inform retail borrowers with foreign currency-denominated mortgages of a government assistance program, launched on Friday, that temporarily fixes the exchange rates for their repayments.