Hungary PM: Econ Could Contract By More Than 3.5% Forecast

Hungary PM: Econ Could Contract By More Than 3.5% Forecast BUDAPEST -(Dow Jones)- Hungary's economy could contract by more than the government's current 3.5% forecast this year, Prime Minister Ferenc Gyurcsany said Sunday, meaning that the country's incoming government will need to launch further austerity measures to keep the budget deficit under the 3% of gross domestic product level. "There is a bigger chance, or rather risk, that the economic recession will be deeper than 3.5%," Gyurcsany said in an interview on national television channel M1. Gyurcsany offered his resignation Saturday, saying a new government headed by a new prime minister will be better authorized to lead the country out of the economic crisis. The government unveiled an economic package Feb. 16 aimed at tackling the economic crisis and keeping the budget deficit on track. However, a deeper recession will hit budget revenues, making more austerity measures unavoidable if the new government wants to keep current fiscal commitments. Gyurcsany was adamant that his resignation from the helm of the minority government is final. "My decision to resign is final ... in a couple of weeks I won't be the prime minister of this country," Gyurcsany said. Earlier Sunday, Gyurcsany said Parliament could elect his successor April 14 via a no confidence vote. When asked about the person of the next prime minister, Gyurcsany said he had a name in mind but refused to unveil the name. He did stress, however, that he would be "very surprised" if former finance minister Lajos Bokros would become the new premier with the backing of the ruling Socialist Party. Besides Bokros, former central bank Governor Gyorgy Suranyi, former Finance Minister Laszlo Bekesi, and current central bank Governor Andras Simor are tipped as possible successors to Gyurcsany by local media. The new prime minister will likely not come from the ranks of the ruling Socialist Party but rather be an independent politician, who would enjoy the backing of the liberal SZDSZ and the conservative MDF, two possible allies for the Socialists in forming the new cabinet. Gyurcsany's comments Sunday that the new government may have members from opposition parties indicate that the Socialist Party, which doesn't have a majority in government, is looking for cooperation with the two smaller opposition parties. Gyurcsany sounded firm Sunday that the new government will have a "stable majority" in Parliament, in which case early elections won't be called. Hungary's next general elections are scheduled for 2010.