Prime Minister Viktor Orbán restated this week his government’s commitment to slashing the national debt to below 50 per cent of gross domestic product, while the National Economy Ministry reported that the budget deficit had pushed past 97 per cent of the full-year target last month.
“We are waging a day-to-day war against debt,” Orbán said after meeting his Lithuanian counterpart Andrius Kubilius during a one-day trip to Vilnius on Monday. Orbán said Lithuania’s debt-to-GDP ratio of 38 per cent represented “freedom itself” in comparison to Hungary’s around 80 per cent.
Central Europe is looking ahead to a “fantastic decade”, Orbán was quoted as saying by state news agency MTI. This was after he acknowledged, however, that although Hungary would like to follow the Lithuanian example, it was still fighting a recession.
97% of deficit after 8 months
The government’s budget deficit target for the year is 2.5 per cent, half a percentage point below the maximum permitted under the EU’s Maastricht criteria.
However, the National Economy Ministry confirmed on Monday that a HUF 122 billion (EUR 427.78 million) deficit in August had pushed the overall deficit past 97 per cent of the full-year total with four months still to go.
The deficit target is further jeopardised by disappointing economic growth.
A ministry official was quoted by The Wall Street Journal last week as saying that there is little chance of the government’s hope of a modest 0.1 per cent growth this year becoming reality. The economy contracted 1.3 per cent in the Q2, year-on-year.