Almunia: Hongarije zal EU-steunfondsen kwijtraken als begrotingstekort niet wordt aangepakt (en)

In his harshest criticism so far, monetary affairs commissioner Joaquin Almunia i has suggested Hungary may lose EU structural funds if it does not curb its skyrocketing budget deficit.

Mr Almunia confirmed after meeting EU finance ministers on Tuesday (8 November) that Brussels is considering cutting Hungary's infrastructure handout if Budapest does not tackle its 6.1 percent budget deficit.

The commissioner stated after a meeting with EU finance ministers that both the European Commission and the European Central Bank are "seriously concerned" about the budgetary situation of the Hungarians, according to an AP report.

Budapest's shortcomings in tackling its deficit are also hurting neighbouring states' economies, he added. "In the last period, there have also been some negative spillover effects on the other countries in the area that are of serious concern."

Budapest's action has so far proved insufficient to reduce the state deficit to 3.6 percent in 2005 and 2.9 percent in 2006, as earlier projected.

Instead, the Hungarians recently had to revise their estimated figure for 2005 to 6.1, after the EU statistics agency Eurostat said Budapest needed to include highway construction costs in the national budget.

Hungarian finance minister Janos Veres attributed the high figure solely to accounting methods, but commissioner Almunia made clear that his explanation was insufficient, AP reports.

As Hungary is not yet a member of the eurozone, it cannot be penalised for its behaviour through formal sanctions as part of the EU's stability pact.

But with its threat to cut structural funding, the commission has now clearly signalled that it is willing to sanction Budapest despite this.

The commission was backed by other finance ministers in its tough stance.

Budapest's ballooning budget could also prove a serious obstacle to the Hungarian ambition to join the euro in 2010.

A Reuters poll among analysts conducted in October predicted that the budget troubles could putt off the country's euro zone entry to 2013.