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Central bank report critical of convergence programme progress

Hungary's budget veered from the convergence plan by 2% of GDP in 2004 and as much as 3% of GDP in 2005, according to the central bank's "Report on the Convergence Process" published on Monday. The report noted that the average inflation rate between October 2004 and November 2005 was 4.1%, compared to the 2.4% target under the convergence programme. The accrual-based general government deficit was 6.5% of GDP, even accounting for the effect of pension reform, compared to the 3% of GDP mark in the convergence programme, the report said. Hungary's state debt reached 60.5% of GDP in 2004, compared to the 60% limit in the convergence programme, while long-term interest rates averaged 6.8% over the past 12 months, compared to the targeted 5.5%, the central bank said.