Hungarian PM: Weakening currency a worry as economic crisis deepens

Hungarian PM: Weakening currency a worry as economic crisis deepensBudapest  - Hungary's Prime Minister Ferenc Gyurcsany on Monday expressed concern over the ongoing rapid weakening of Hungary's currency, the forint, after signalling that euro adoption is now a matter of urgency.

"The government is distinctly worried by the rapid fall in the value of the forint, and the fact that it is very difficult for businesses and individuals to get credit from banks," Gyurcsany said on Monday.

He was speaking after an emergency meeting with Finance Minister Janos Veres, central bank chief Andras Simor and Social and Labor Affairs Minister Erika Szucs.

The forint has repeatedly hit record lows against the euro over the past few weeks, falling to within a whisker of the psychological barrier of 300 forints to the euro on Monday morning.

The weakening forint is very alarming to ordinary Hungarians, as the bulk of their mortgages and personal loans are denominated in foreign currencies. Monthly repayments have risen by as much as a third in recent months as the forint continues a downward spiral.

Gyurcsany said on national television on Sunday that his socialist government is preparing to implement Hungary's most drastic tax and welfare reforms since the system was last changed two decades ago.

The prime minister said that specific details will be put before parliament on February 16. Gyurcsany also said that a "credible road map" for Hungary's soonest possible entry to the eurozone would be drawn up by September.

Gyurcsany announced last Thursday that income tax and employers' contributions would be lowered in a bid to protect jobs and breathe life into Hungary's flagging economy. These cuts will have to be made up elsewhere in the budget, the prime minister warned.

The local business information firm Opten reported on Monday that the number of Hungarian companies going into liquidation rose to a record high of 1,399 in January, compared to a monthly average of 959 last year. (dpa)

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