The International Monetary Fund (IMF) warned Hungary on Wednesday that it would not tolerate a rise in the country’s budget deficit to 7 percent of gross domestic product (GDP), Dow Jones reported on Wednesday.
The main opposition party Fidesz, likely winner of parliamentary elections to be held this spring, has predicted earlier that Hungary’s budget deficit could swell to 7 percent of GDP in 2010. The IMF is in contact with Fidesz about budget-calculation methods and is open to talks with the new government after the elections, IMF Resident Representative in Hungary Iryna Ivaschenko told Dow Jones Newswires in an interview.
“The views are still developing. But we have been in contact with Fidesz, as always, and now our message to the opposition is that it’s really important to keep policy continuity, for confidence,” Ivaschenko said.
The IMF’s representative noted that while Fidesz’s calculations are cash-flow based, the government’s projection of a 3.8 percent of GDP budget gap are based on the EU’s accounting methods.
“Under the current projections, we have projected that the public debt to GDP ratio would start declining next year. And if you upset the deficit for just one year, it would undermine this reduction in the public debt to GDP ratio, and this is very important to Hungary,” Ivaschenko added.