If Parliament approves the 2010 budget bill as it was submitted by the government, Hungary’s public finance deficit could fall under 4 percent of gross domestic product (GDP), National Bank of Hungary Governor Andras Simor said after a rate-setting meeting on Monday.
The government targets a budget deficit of 3.9 percent of GDP deficit in the 2010 budget bill.
Simor said spending cuts in the areas of public transport and local councils posed risks, although the fundamental path of the 2010 budget can still be achieved.
He welcomed the recent fall in government securities yields, but said steps had to be taken to increase liquidity on the government securities market, especially if the state wants to raise its forint bond issues. The measures would make it easier to put forint-denominated government securities on the market, he added.
It is the role of the Finance Ministry, not the central bank, to regulate the government securities market, Simor said. The central bank currently has 210 billion forints of government securities, “but we don’t think that we will sell this amount before they mature,” he added.