Hungary’s budget deficit is expected to reach the full-year target by the end of April, said Mihály Varga, Vice President of main opposition party Fidesz. Finance Minister Péter Oszkó said Varga, the “fact finding committee" he leads and the 29 right-wing economists they have consulted are all wrong - again.
By the end of April, Hungary’s public sector deficit will be where it should be only at the end of 2010, Varga told a press conference on Thursday. This means the shortfall will be much bigger than what the government envisages, he added. He underlined that a massive overshoot of the deficit target would affect Hungary’s assessment and have market implications, as well.
Hungary projects this year’s budget deficit to reach HUF 879 billion (on a cash flow basis, excluding local governments). The MoF expects the gap at HUF 651 bn by the end of March that would correspond to 74% of the full-year goal, which implies a more progressive deficit path than in the past years, but the MoF has so far refused to review its full-year objective.
The April readings have been between HUF -225 bn and HUF +17 bn since 2004, but mostly a moderate deficit was recorded. Based on the MoF’s estimate for the first quarter and experience from the past years, the projection by Fidesz and the economists close to the party is unfounded.Answering a question Varga said Fidesz has not consulted with the International Monetary Fund (IMF) about the size of budget deficit the IMF would still tolerate in 2010. The cabinet aims at 3.8% of GDP, while Fidesz claims the shortfall could be as large as 7.0-7.5%.
Varga said his party and the IMF view the state of the economy through rather different eyes.
Finance Minister Péter Oszkó told a press conference today that Hungary’s budget deficit could slightly exceed 75% of the full-year target by end-April therefore the estimate made by Fidesz and the group of right-wing economists is wrong.
Oszkó reminded that the 29 economists have made a mistake already when they forecasted a 2-4% yr/yr GDP contraction for 2010.
He noted that by the end of Q1 2009, the budget shortfall reached 62% of the full-year goal, but the annual target was still met.
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