Talk of Hungary default 'wildly exaggerated': EU

EU's top economy official dismissed talk that Hungary was about to tumble into default, saying its economy was on the way to recovery.

Talk of Hungary default 'wildly exaggerated': EU

 

The European Union's top economy official on Saturday dismissed talk that Hungary was about to tumble into default, saying its economy was on the way to recovery.

Fear of a Hungarian debt crisis pushed the euro to a four-year low on Friday after a government spokesman said the country had only a slight chance of avoiding the same fate as Greece is facing.

"Hungary has made serious progress in consolidating its public finances over the last couple of years," EU Economic and Monetary Affairs Commissioner Olli Rehn told reporters in the South Korean port city of Busan.

He was speaking at the end of a two-day meeting of finance ministers of the Group of 20 leading developed and emerging economies, dominated by concerns over the increasingly troubled euro zone.

"Now the Hungarian economy is on the way to recovery and has shown the first signs of strength in the first quarter of this year. Therefore, any talk of a fiscal or debt default in Hungary is widely exaggerated," Rehn said.

A run on its currency after the 2008 global financial crisis forced Hungary to turn to the EU and the International Monetary Fund for a $25 billion rescue package.

Spain's Economy Minister Elena Salgado, also attending the G20 meeting, said an EU-IMF mission would have to decide whether the concerns were correct and to what extent the fiscal deficit might rise. But she made no mention of whether such a mission was imminent.

"Nevertherless, the Hungarian government has taken very brave measures to reduce the fiscal deficit and I think they are going to continue doing that," she said. Spain currently holds the rotating presidency of the EU.

The new Hungarian government blames its socialist predecessor for the country's current plight.

Hungarian State Secretary Mihaly Varga, speaking in Budapest, said later that the government aimed to meet its deficit target despite the current difficulties.

The government plans to hold informal talks with the IMF, he said.

Reuters

Last Mod: 05 Haziran 2010, 14:43
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