AlHijjah 10, 1432, Nov 6, 2011, SPA -- Hungarian Prime Minister Viktor Orban retains a firm grip on power despite a fall in support since last year's election landslide and plans to push through an austerity budget next year, even though the economy is slowing rapidly, Reuters reported. To reduce public debt, which at around 76 percent of GDP is the highest in central Europe, the government took over some $14 billion worth of private pension fund assets earlier this year. It now plans a series of tax hikes and spending cuts next year to keep the deficit below 3 percent of gross domestic product, the European Union's ceiling, and to retain the confidence of investors who finance Hungary's debt. Orban's government has failed to fully deliver on its fiscal reform programme announced in March, while its unorthodox policy moves -- especially a controversial foreign currency mortgage repayment scheme -- have boosted Hungary's risk premium sharply in recent months. The country now faces the risk of a downgrade in its credit rating to "junk" status, which could make debt financing more difficult next year, when Hungary needs to refinance close to 5 billion euros in foreign currency debt. The cost of insuring Hungary's debt against default for five years in the credit default swaps market is around 540 basis points , the highest since March 2009, topping central European countries. -- SPA
