Bloomberg News

Hungary’s Earliest Euro-Adoption Date Is 2018

March 02, 2012

Hungary’s earliest possible date to adopt the euro is 2018, Prime Minister Viktor Orban said, as he pledged to narrow the budget deficit and avoid the loss of European Union subsidies.

Hungary, which has been struggling since the end of 2011 to start talks on a bailout from the EU and the International Monetary Fund, faces the suspension of 495 million euros ($657 million) in EU development grants for exceeding the bloc’s deficit limit, which also applies to euro candidates.

The European Commission expects Hungary’s shortfall to reach 3.25 percent of gross domestic product next year, above the bloc’s 3 percent limit. The government targets 2.2 percent, down from 2.5 percent this year. Orban pledged to ensure that a suspension of Hungary’s subsidies this month by EU finance ministers “won’t make a difference.”

“Hungary won’t lose one penny,” Orban said in an interview with state-run MR1 radio today from Brussels. “The whole matter is a technicality. Cutting Hungary’s budget deficit by 0.25 percentage points is a simple exercise.”

A fiscal pact which most European leaders will sign in Brussels today won’t fully apply to Hungary before 2018, the earliest possible date for the country to adopt the euro, said Orban, who last year said it was “unimaginable” for the country to switch currencies before 2020.

“This can hardly be expected in the next few years,” he said. “Even the most optimistic estimates don’t reckon Hungary can be in a state suited for accession before 2018.”

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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