"Having concluded consultations with missions from the International Monetary Fund (IMF) and the European Commission Hungary has decided to maintain its general government deficit targets unchanged at 3.9% of GDP for 2009 and 3.8% for 2010, Finance Minister Péter Oszkó has told a press conference on Monday.The European Commission projected in its semi-annual economic forecast earlier this month that Hungary will overshoot its deficit targets in 2009, 2010 and also in 2010 . Local press reported last week that the IMF was likely to follow suit and up its 2009 deficit projection to 4.1% of GDP. Apparently, the local press was wrong.
Oszkó also said this year’s GDP contraction projection was left on hold at -6.7%, while - in agreement with the international organisations - the forecast for 2010 was lowered to -0.6% from -0.9%.
As Hungary’s inflation has caused one downside surprise after another over the past months, the Finance Ministry trimmed its estimate for this year’s annual average inflation to 4.2% and cuts its CPI fcast for 2010 to 3.9% from 4.1%, Oszkó added.
As conditions for market-based financing of Hungary’s debt have become more favourable and also because the country’s external financing requirement decreased, Hungary has decided not to draw the next tranches of the loans granted by the IMF and the European Commission, the FinMin said. The remaining tranches of the Stand-By Arrangement will be modified accordingly.
In early September, the IMF agreed to extend its SBA with Hungary by six months to 5 October 2010. At that time, the key macroeconomic objectives remained unchanged both for 2009 and 2010.
The IMF, along with the European Union and the World Bank granted Hungary a USD 25.1 bn lifeline last autumn to protect the country from meltdown.
Oszkó said a similar change will be initiated at the European Commission, as well."
Source: Portfolio Online Financial Journal
17.11.2009