Hungary's government said on Saturday it still aimed to meet this year's deficit target, as it sought to draw a line under exaggerated talk of a possible Greek-style debt crisis that had unnerved markets a day earlier.
State secretary Mihaly Varga, who headed a committee examining the state of the budget, said Hungary's previous socialist governments had hidden the true state of the country's public finances, and that additional measures would be needed to reach the 3.8 percent of GDP target.
Fears of a Hungarian debt crisis pushed the euro to a four-year low on Friday after a ruling party official said the country had only a slight chance of avoiding the same fate that Greece is facing and the prime minister's spokesman said he supported this view.
Those comments which were made on this issue are exaggerated, and if a colleague makes them it is unfortunate, Varga told a news conference.
I have to say that the situation is consolidated, and the planned deficit (target) is attainable, but for it to be attainable the government must take measures.
He said some tax revenues were lower than planned in the current budget and several spending items higher or not included in it at all.
We must state that the Bajnai government, similarly to the Gyurcsany government in 2006, ... did not present a credible picture of the real state of the country, Varga said.
When asked repeatedly if it could be stated that Hungary was not close to default, Varga told the news conference:
I have said that any comparison with countries with much higher CDSs is unfortunate. These do not give a credible picture of the state of Hungary....
He declined to give an estimate, or a range projection, for the 2010 budget deficit but said the government would come up with an action plan at an extraordinary meeting lasting until Monday.
Varga also said the government aimed to meet the 3.8 percent of gross domestic product target agreed with international lenders.
Prime ministerial spokesman Peter Szijjarto said on Friday that he supported the view his country had only a slim chance of avoiding a Greek-style debt crisis, although he said his government would act swiftly to avoid the Greek path.
On the local market, the forint plunged over 2 percent versus the euro to a new one-year low at one point, while five-year credit default swaps (CDS) jumped, as investors called for clarity on the government's plans.
(Reporting by Krisztina Than and Marton Dunai; editing by John Stonestreet)