Hungary rejects EU pressure to cut budget
Published 23/07/2010 | 05:00
Hungary's prime minister signalled yesterday that he would not renew a deal on an IMF safety net and would row back on a commitment to cut the budget deficit to EU-prescribed levels next year.
The comments from Viktor Orban, who took power in May with the largest majority in Hungary's post-communist history, were the latest in a string of statements that have stunned markets and confounded a Europe-wide push towards spending cuts.
Mr Orban, who has shunned outside economic advice in favour of a domestic agenda, has pledged to end the belt-tightening pursued by the previous socialist government. He may be thinking of October's municipal elections, when he could consolidate his party's grip on Hungarian politics.
Analysts said his centre-right cabinet's rejection of more austerity measures in favour of a "pro-growth" policy including a tax on banks and possibly other businesses might be softened after the municipal vote.
Mr Orban has rejected warnings that Hungary could face market pressure and currency weakness without support from its lenders, and said the €20bn EU and IMF deal would expire in October.