Hungary PM: Refoms To Continue, Net Tax Cuts Not Possible

BUDAPEST -- Hungarian Prime Minister Ferenc Gyurcsany on Wednesday pledged his minority government will continue implementing reforms until the 2010 elections with measures that would reach over the current government cycle.

"I want to...initiate a second phase of reform politics...regardless of what the impact will be on my personal or the Socialist Party's popularity," Gyurcsany said at a press conference.

At the same time the premier stressed Hungary couldn't afford to significantly cut taxes in order to boost economic growth going forward.

"In the U.K., where they announced tax cuts, next year's budget deficit will be around 8% of gross domestic product, if something similar happened in Hungary, the forint would collapse," Gyurcsany said. "The budget figures for 2010 and 2011 show that tax cuts can be only carried out if other taxes are increased."

He reiterated the government was looking to ease wage-related taxes and said he was seeking a political agreement on tax measures for 2010-2011 by the spring of next year.

Overhauling Hungary's expansive local council system, reducing the size of Parliament and changes in social spending are also main issues the government will tackle in the remaining one and a half years, Gyurcsany added.

-By Edith Balazs, Dow Jones Newswires; +361-267-0623; edith.balazs@dowjones.com