Hungary to seek IMF approval for higher deficit

BUDAPEST, May 2 (BestGrowthStock) – Hungary’s new government will
seek the approval of the International Monetary Fund (IMF) for
a higher 2010 budget deficit than the current target, a key
advisor of the country’s next prime minister said on Sunday.

“If we take the reform steps needed, which create the
condition of sustainable (deficit) reductions, then we can
agree with the IMF,” Gyorgy Szapary told the state television
M1.

Prime Minister-elect Viktor Orban, whose centre-right
Fidesz party won elections a week ago, named Szapary on
Thursday as an advisor in his office in charge of negotiations
with the country’s international lenders, the IMF and the
European Union.

Fidesz said earlier that the 2010 budget deficit could well
exceed the present target, 3.8 percent of gross domestic
product (GDP), mainly because the budget of the outgoing
Socialist government did not include certain costs.

Szapary said he saw serious tension on the spending side of
the budget, including the debt and costs of local governments
and state railway company MAV. He said the real size of the
deficit would be at least 6 percent of GDP.

“The new government wants to cut the deficit, the question
is the starting level of the deficit from which it would be
reduced,” he said.

The government will require any participant of the state
sector whose debt will be consolidated to rationalize its
operations, he added.

“The IMF and the government has the same interest: to
ensure sustainable economic growth … growth in the economy
should not come at the price of financial imbalances,” he
said.

Hungary resorted to emergency financing from the IMF and
the European Union in October 2008 to avert financial
meltdown.

The outgoing Socialist government has stabilised the
country’s finances over the past year and Hungary has not drawn
on any fresh funds from its existing IMF package so far this
year as it has been able to finance itself from the markets.

The present financing deal will expire by October and
officials of election winner Fidesz have said the new
government would seek to extend the present agreement or to
sign a new precautionary deal with lenders later this year.

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(Reporting by Sandor Peto; Editing by Bernard Orr)

Hungary to seek IMF approval for higher deficit