The EU’s top economic official yesterday dismissed talk that Hungary was about to tumble into default, saying its economy was on the way to recovery.
Fears of a Hungarian debt crisis pushed the euro to a four-year low on Friday after a government spokesman said the country had only a slight chance of avoiding the same fate as Greece is facing.
“Hungary has made serious progress in consolidating its public finances over the last couple of years,” EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters at the end of a two-day G20 meeting in the South Korean port city of Busan.
“The Hungarian economy is on the way to recovery and has shown the first signs of strength in the first quarter of this year. Therefore, any talk of a fiscal or debt default in Hungary is wildly exaggerated,” Rehn said.
A run on its currency after the 2008 global financial crisis forced Hungary to turn to the EU and the IMF for a US$25 billion rescue package.
Spain’s Economy Minister Elena Salgado, also attending the G20 meeting, said an EU-IMF mission would have to decide whether the concerns were correct and to what extent the fiscal deficit might rise.
“Nevertherless, the Hungarian government has taken very brave measures to reduce the fiscal deficit and I think they are going to continue doing that,” she said.
Spain currently holds the rotating presidency of the EU.
Hungarian State Secretary Mihaly Varga, speaking in Budapest, said later that the government aimed to meet its deficit target despite the current difficulties.
Varga said at a news conference that recent comments about a possible default were “unfortunate” and the government’s ability to finance itself “is not a question.”
Hungary intends to meets its original budget deficit goal, Varga said. The EU has set a deficit target of 3.8 percent of GDP.
The “smaller the deficit the better” and the government plans to hold informal talks with the IMF, he said.
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