Ferenc Gyurcsany, Hungary's prime minister, yesterday released a medium-term fiscal and economic plan with higher debt figures than an earlier version leaked last week.
The report - a euro "convergence plan" that Hungary must submit to Brussels - continues a government shift since its re-election in April towards conservative forecasting. Some analysts believe it is part of an effort to repair Hungary's battered reputation among investors and the EU.
Hungary has missed every annual deficit target for five years, prompting the European Commission to throw out Budapest's previous convergence plan. The commission demanded a new plan by September 1st.
"It seems [ the government] is very much emphasising credibility," said Gyorgy Barcza, senior economist for ING Bank.
Mr Gyurcsany said Hungary should be able, by 2009, to satisfy all Maastricht criteria for adopting the euro, meaning euro entry could happen by 2011 or 2012. However, given the latest figures, most analysts say Hungary will be unlikely to adopt the euro before 2014.
The plan announced yesterday foresees gross public debt climbing to 71.5 per cent of gross domestic product (GDP) in 2007, 72.7 per cent in 2008 and dipping to 70.8 per cent in 2009.
The debt figures were slightly higher than the figures leaked to the media last week and which caused the forint to fall 1.5 per cent against the euro. The forint did not react sharply to yesterday's news. According to the plan, the budget deficit will reach 10.1 per cent of GDP this year, including pension reform costs that can be excluded under EU accounting rules. It is expected to fall to 3.2 per cent by 2009.
The inflation forecast for 2007 changed from 5.5 per cent to 6.1 per cent, while economic growth will fall to 2.1 per cent in 2007 and 2.6 per cent in 2008.
