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Veres: Gov’t has emergency plan

  The government has an emergency plan if the Hungarian economy contracts by more than 3.5% in 2009, Finance Minister János Veres said in a television interview early Monday.

Hungary’s GDP is strongly affected by exports to Germany, and if the German economy shrinks by more than the currently projected 3%, Hungary’s GDP could drop more, and that is when the emergency plan would come into play, Veres said without providing any further details.

The government’s new tax package takes into account two decisive views: the GDP projection and the 2.9%-of-GDP general government deficit target, Veres said. If Hungary fails to meet the deficit target, it could lose its EU funding, he added.

Hungary will use the second, €2 billion tranche of an EU credit line it could call down to increase the central bank’s foreign reserves, Veres said. Almost €2 billion of a €20 billion credit line from the IMF, the EU and the World Bank was used to buy back government securities issued by the Government Debt Management Agency (AKK) over the past four months, he added. (MTI-Econews)