European Union and Monetary Affairs Commissioner Olli Rehn stated that Hungary Can't Afford to postpone its budget deficit. In a period when the rest of EU-member countries are on the road of fiscal consolidation, Hungary can't afford to deviate from this path, Rehn said, adding that Instead of increasing the budget deficit, Hungary should follow sound fiscal policy which is a prerequisite for sustainable growth.
Talks between the country and the IMF reached a dead-end last month after Hungary refused to reduce its deficit below the EU limit of 3.0 percent of GDP in the upcoming year. Hungary deficit reached in 2009, 4.0 percent of the country's GDP, compared with 2006 deficit of 9.3 percent, meanwhile, Hungary government vowed to slash its deficit during 2011 by 2.8 percent.
Hungary's GDP contracted by 6.3 percent during 2009; which forced the government to impose special taxes on financial institutions in order to prevent the deficit from widening further. Hungary's Seasonally Adjusted second quarter GDP in 2010 came out flat, compared with the first quarter expansion of 0.9 percent and a year earlier contraction of 1.4 percent.