The situation in Hungary is "not ripe" for the euro; the European currency could only be adopted in 2015 or 2016, former central bank governor Zsigmond Jarai said in Budapest on Tuesday.

Speaking at a conference of the Association of Employers and Industrialists, Jarai said that the actual situation of the Hungarian economy was worse than it appeared to be. "Hungary is kept afloat by the IMF loan," he said.

Hungary secured a 20 billion euro bailout led by the IMF in October 2008 in order to avert meltdown amidst the global financial crisis.

By the time Hungary has a new government after the elections in April, the budget deficit will reach the amount projected for 2010 as a whole, the former central bank head said.

Jarai said that the next government would have to prepare a new budget based on "drastic" tax cuts with no delay.

Hungary needs a budget that will make its economy more competitive, he said, adding that all this requires the introduction of "a fiscal dictatorship".

Jarai emphasised that he expounded his own views rather than Fidesz's economic policy but added that there were some overlaps between the two.

Jarai was finance minister in the Fidesz-led government from 1998 to 2001 and then headed the National Bank of Hungary until 2007.