Budapest - Prime Minister Gordon Bajnai on Friday promised Hungary would maintain strict fiscal discipline right up to the next general election in 2010. "I can assure you there will not be an election budget," Bajnai told local and foreign business leaders in the capital, Budapest.
The prime minister said he intends to hand over a "mended country" to the next government, whoever forms it, and cautioned that the hard work is far from over.
The worsening economic environment, and a predicted contraction in the Hungarian economy of almost 7 per cent this year, mean a further 100 billion forints (513 million dollars) needs to be trimmed from the 2010 budget.
Bajnai identified local authority spending and the state-owned rail network as key targets for cutbacks.
The main Hungarian opposition party, Fidesz, maintains that the Bajnai government is "illegitimate" and has called for early elections.
"The Socialists are preparing another brutal austerity package for its budget, for which it has absolutely no authority," said Fidesz spokesman Andras Cser-Palkovics in a statement.
The centre-right party has held a commanding lead in opinion polls for over two years and pledged to repeal a new property tax and other aspects of the Bajnai austerity package if and when it takes power.
"There is no alternative to the 3.8 per cent budget deficit target. This question is not open to political debate," Bajnai said in an interview with the daily Nepszabadsag the same day.
"The opposition's message is very dangerous, because if they really do repeal what we have so far legislated for, then according to our calculations the budget deficit would be around 10 per cent, which would mean immediate collapse," Bajnai said.
His comments came two days after the International Monetary Fund (IMF) issued a report saying it was broadly satisfied with Hungary's efforts to balance its books, though it called for increased financial supervision and further spending cuts.
Hungary was granted a 25-billion-dollar, IMF-led emergency loan in October as it looked set to default on its foreign debt.
However, the money came with strict conditions regarding budgetary spending cuts in sensitive areas such as pensions and public sector pay.
Hungary has pledged to keep its budget deficit below 3.9 per cent this year, and reign it in to 2.8 per cent by the end of 2011.
In its first 75 days in government, Bajnai's crisis cabinet implemented spending cuts of 1,300 billion forints (6.68 billion dollars) for this year and 2010.
The interim prime minister took office in April after his Socialist predecessor Ferenc Gyurcsany quit, having led Hungary into an economic crisis that pre-dated the global meltdown by at least a year.
The first draft of the 2010 budget will be presented to parliament in early September, he said.
"There are still some hellishly difficult tasks ahead of us," Bajnai said.
