Hungary seeks to calm financial fears

08:51, June 07, 2010      

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Hungary's government hastened to calm fears Saturday, assuring that the country's public deficit is containable, after earlier statements that it faced similar problems to Greece.

"The Hungarian economy has healthy foundations and the deficit target of 3.8 percent of gross domestic product can be maintained for 2010 if we adopt certain measures," State secretary Mihaly Varga said.

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

"Those comments ... are exaggerated, and if a colleague makes them it is unfortunate," Varga told a news conference in Budapest Saturday.

The IMF said Friday that its new mission chief for Hungary, Christoph Rosenberg, would be going to Budapest today "for a short visit to meet the new government and discuss the economic situation and prospects with senior officials."

Hard hit by the global economic crisis, Hungary received a $24-billion rescue package from the IMF, the World Bank and the European Union in November 2008.

After tapping the IMF lifeline three times for a total of $10.4 billion, the government said in November 2009 that it no longer needed to draw on the credit thanks to improved investor confidence in the country's economy and bonds.

IMF chief Dominique Strauss-Kahn, speaking at the G20 summit of top financial officials in Busan, South Korea, said he was "surprised" by the reports from Budapest, while the European Union's Economic Affairs Commissioner Olli Rehn expressed skepticism.

Rehn dismissed fears of a default, saying that Hungary had made major steps in recent years, in particular cutting its deficit by five percent between 2006 and 2009.

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