Bloomberg News

Hungary May Cut Debt to as Low as 56% by 2020, Central Bank Says

October 10, 2011

Oct. 10 (Bloomberg) -- Hungary may cut public debt to as low as 56 percent of gross domestic product by 2020 if the government delivers reform measures and keeps the structural budget gap at 1.5 percent of output, the central bank said.

Government debt would probably still exceed the current average of regional competitors, and its level “will limit the room for fiscal maneuvers for years to come,” the Magyar Nemzeti Bank said in a report today.

Hungary is raising taxes and cutting spending to trim the 2012 budget deficit to 2.5 percent of GDP as the economy slows. The Cabinet of Prime Minister Viktor Orban slashed its growth forecast for next year in two steps to 1.5 percent, higher than the central bank’s 1 percent projection.

Hungary “should undertake deliberate” planning for euro adoption even without Orban aiming to start using Europe’s common currency before the end of the decade, the study said.

“Fiscal policy should aim for a much stricter debt level than the Maastricht criterion in order to have adequate room to manoeuvre,” it said.

--Editors: Balazs Penz, Alan Crosby

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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