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Minister Mikloš says Hungarian deficit troubles may affect Slovak economy

HUNGARY'S budget deficit, which is constantly growing and was the subject of EU criticism on November 8, may also negatively influence the Slovak economy, Finance Minister Ivan Mikloš said in Brussels.

"As we know from the common experience, V4 countries' currencies move as one unit. When they decline, they all decline; when they rise, they all rise together," Milkoš told reporters at a press conference.

He noted that the Slovak economy is the smallest in the region and turbulences in other V4 countries' economies may affect Slovakia. "That's, by the way, just another reason for us to enter the eurozone as soon as possible, which would make us immune to such turbulences as unpredictable changes in the exchange rate which, of course, causes damage in an open economy," he explained.

EU finance ministers on November 8 urgently called on Hungary to adopt measures to lower the deficit figure, which is causing some major worries in the union. The European Commission (EC) will deliver specific recommendations to Hungary in January, the TASR news wire wrote.

The criticism came after Hungary didn't respect two previous recommendations prepared by the EC. They were presented as disciplinary motions due to the high deficit.

The rules of the European Union do not allow deficits of its member states to exceed 3 percent of GDP. However, this year's deficit in Hungary is estimated to be 6.1 percent, and 5.2 percent is projected for next year. These figures are a far cry from those listed in Hungary's Convergence Programme, which reckoned on deficits of 3.6 percent in 2005 and 2.9 percent in 2006.

Compiled by Beata Balogová from press reports
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