"The Government is sticking to its previously adopted deficit target of under three percent", announced Minister without portfolio Mihály Varga on Friday in reaction to the European Commission's winter forecast.

The Minister stated that it will soon become tradition that we begin each year with the European Commission questioning the Government prognosis for the given year.  However, the result of the argument in both 2011 and 2012 was that the standpoint of the Hungarian Government proved to be correct.

"The situation is the same now; the European Commission disagrees with our 2.7 percent forecast, but the Hungarian cabinet is sticking to this target", said the Minister without portfolio responsible for loan negotiations, according to whom the Hungarian prognosis may be underpinned in three ways.

Firstly, it is only February, and it would be worth waiting at least four of five months before making a clearer analysis of the expected economic scenario for this year, he noted.

Secondly, he continued, Government measures have since been defined with regard to several budget-related items disputed by the European Commission. These include the introduction of the electronic road toll and the online connection of cash registers to the tax authority, in relation to which a decision has been published in the Hungarian Government’s official journal that is aimed at speeding up their implementation. In the opinion of Mrinister Varga, these two issues will be "settled satisfactorily" during the first half of the year.

Thirdly, this year the budget includes a significant, HUF 400 billion reserve to handle unexpected economic processes and problems. When 1.2-1.4 percent of the GDP is available in the budget as a reserve, it must certainly be enough to correct a 0.3-0.4 percent difference, if required, he said.

The Minister reminded the press that the state of the deficit this year is especially important because it would make possible the termination of the excessive deficit procedure put into place against Hungary. The winter report from Brussels "is of minor importance", he explained, because it will be late May  when the European Commission prepares its more significant report, which may be used as a basis for decisions at the meeting of finance ministers in June.

The Cabinet is committed to have the excessive deficit procedure, which has been in existence since 2004, lifted, Mihály Varga made clear.

With regard to the fact that the European Commission had also forecast a 3.4 percent of GDP budget deficit for 2014, Mr. Varga stated that he felt it a little unjustified that the European Commission should publish such statements for as far ahead as 2014.

It is true that EU growth data for the fourth quarter of 2012 was much lower than expected, but nobody can say for certain how and to what extent the latest growth data will affect things in 2014, the Minister stated.

(MTI; Minister without portfolio's Press Office)