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Last Updated: Tuesday, 26 September 2006, 14:13 GMT 15:13 UK
EU backs Hungary's budget plans
Hungarian Prime Minister Ferenc Gyurcsany
Mr Gyurcsany admitted that he lied about the state of the economy
Hungary's programme of austerity measures to try and gets its economy back on track has been backed by the European Commission.

With Ferenc Gyurcsany's struggling government planning to raise taxes and cut social spending, Brussels said it wanted a "rigorous implementation".

Hungary needs to take action as its 2006 budget deficit is expected to hit 10.1% of GDP, the highest in Europe.

This is way above the European Union's 3% ceiling for all member states.

However, despite the Commission's strong words, it has given Hungary another year to get its deficit back in line, extending its deadline from 2008 to 2009, in line with Budapest's new plans.

'High risk'

Mr Gyurcsany's efforts to reduce Hungary's budget deficit comes as he continues to face demands to stand down.

There were a number of riots in the country earlier this month after Mr Gyurcsany admitted he had lied to voters about the state of public finances in order to win April's general election.

EU Monetary Affairs Commissioner Joaquin Almunia said the long-term sustainability of Hungary's public finances were "at high risk on account of the very high deficit and debt level".

"This makes it all the more important to reduce the deficit rapidly and to reverse the increase in the debt, he added.

"We will continue to closely monitor the situation to verify that the announced measures are fully implemented and that the government decisively carries out its agenda for structural reform and expenditure control."

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