FM says Hungary on track to meet budget deficit targets

Hungary is on course to meet its budget deficit target for 2009 based on European Union accounting rules, the finance ministry said on Tuesday.

Hungary must meet the deficit target of 3.9 percent of gross domestic product (GDP), based on EU rules, as part of its bailout deal with the International Monetary Fund.

The government has said that it undershot its cash-flow based target of 3.8 percent of GDP and therefore it is likely that the EU-based number will also be met.

Finance Minister Peter Oszko told a news conference that this year’s budget deficit target of 3.8 percent of GDP using EU accounting rules was in the government’s sights. This year’s cash flow-based general government deficit is expected to be 3.3 percent without local councils and 4.0pc with local councils.

Oszko said the 2010 budget deficit would be front-loaded partly because of extra hospital financing, costs associated with state railway MAV, interest payments and public sector bonuses to be paid in February. He said 651.3 billion forints of the projected full-year 870.3 billion cash flow-based deficit for 2010 would be run up in the first quarter of the year,

But he insisted that these extra items would not have a bearing on whether the target could be attained.

Opposition party Fidesz – which is widely expected to win the election likely to be held in April – has said that items unaccounted for could swell the deficit to more than 7 percent of GDP in 2010.

Oszko said the ministry may have to review its full-year corporate tax target of 609 billion after the tax revenues were just 385 billion in 2009.