Source: Bloomberg.com

Hungary’s government and opposition failed to reach an agreement on measures to stem a crisis that battered local markets and forced the country to seek help from the International Monetary Fund and European Central Bank.

In a “national summit” called by Prime Minister Ferenc Gyurcsany, the government and central bank urged cutting the budget deficit faster than previously planned to stabilize financial markets, while the opposition, which is more popular than the ruling Socialist Party, called for reducing taxes to accelerate growth.

The global financial crisis is hitting more vulnerable emerging markets as investors shunned riskier assets in a flight to safety. Hungary’s stocks, bonds and currency plunged this week, Fitch Ratings and Standard & Poor’s cut the outlook on the country’s debt, while the government was forced to lower its economic growth forecast for next year.

“The risk appetite of investors has fallen dramatically,” Magyar Nemzeti Bank President Andras Simor said at the meeting. “Any tax cuts must be preceded by a sustained reduction of spending.”

Narrowing the deficit is the government’s “most important task,” Finance Minister Janos Veres said today. This year’s shortfall will be 3.4 percent of gross domestic product “at most” and the government can “hopefully” undershoot that, Gyurcsany said.

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