Hungary Warns About Deficit

The European Commission on Thursday urged Hungary to cut its budget deficit faster as the government warned that its 2010 fiscal deficit may reach almost twice the target agreed with lenders including the EU. The new center-right government has warned in recent weeks that the deficit could be much higher than the agreed target of 3.8 percent of GDP. The government has blamed "fiscal skeletons" left by the previous Socialist administration. A top government official said the deficit could be 7.0-7.5 percent of GDP. Analysts were quick to point out that Hungary's state finances are not comparable to Greece. The Hungarian forint fell 2.6 percent versus the euro while bond yields jumped 30 basis points. A run on its currency after the financial crisis in 2008 forced Budapest to seek a $25 billion rescue package from the EU and IMF to avoid collapse. Commission President Jose Manuel Barroso said after speaking with Hungarian Prime Minister Viktor Orban, "The message to Hungary is to accelerate fiscal consolidation, not to reduce it."