Hungary's government has moved to minimise the effect of comments by officials that the country faced a Greek-style crisis. "The comments that have been made about this issue are exaggerated," said prime ministerial spokesman Mihaly Varga.
The Hungarian currency dropped 6% against the euro after government officials compared the country's fiscal position with Greece late last week. The forint has since stabilised at about 288 to the euro. Mr Varga added that a target budget deficit for 2010 of 3.8% of GDP, set by the International Monetary Fund, was still "achievable".
This is despite last week's government estimate that the deficit could hit over 7%. "It seems that the comments were geared towards preparing the populace for the fact that... the government will need to backtrack on its election promises," said Marc Balston, strategist at Deutsche Bank.
For its part, the IMF does not consider the situation in Hungary to be too worrying. "There seems to be no particular element of concern," the fund's head Dominique Strauss-Kahn said. His comment was echoed by Eurogroup chairman Jean-Claude Juncker: "I do not see any problem at all with Hungary. I only see the problem that politicians from Hungary talk too much."
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