Fears of Hungary debt crisis dismissed

HUNGARY'S government yesterday tried to draw a line under "exaggerated" talk of a possible Greek-style debt crisis that has unnerved markets.

State secretary Mihaly Varga, who headed a committee examining the state of the budget, said Hungary's previous socialist governments had hidden the true state of the country's public finances and that additional measures would be needed to reach the 3.8 per cent of GDP target.

Fears of a Hungarian debt crisis pushed the euro to a four-year low on Friday after a ruling party official said that the country had only a slight chance of avoiding the same fate as Greece and the prime minister's spokesman said he supported this view.

"Those comments which were made on this issue are exaggerated, and if a colleague makes them it is unfortunate," Varga said.

"I have to say that the situation is consolidated, and the planned deficit target is attainable, but for it to be attainable the government must take measures."

He said some tax revenues were lower than planned in the current budget and several spending items higher or not included in it at all.

"We must state that the Bajnai government, similarly to the Gyurcsany government in 2006... did not present a credible picture of the real state of the country," Varga said.

He declined to give an estimate, or a range projection, for the 2010 budget deficit but said the government would come up with an action plan at an extraordinary meeting lasting until tomorrow.

Varga also said that the government aimed to meet the 3.8 per cent of gross domestic product target agreed with international lenders.