EU rules on four more deficit-bingers

(BRUSSELS) - Europe's budgetary watchdog on Wednesday issued deadlines for Hungary, Latvia, Lithuania and Malta to fix overblown national budgets.

Economic and Monetary Affairs Commissioner Joaquin Almunia said all four had taken "adequate steps towards correcting their budget deficits."

However, the commission extended by a year deadlines for Lithuania and Malta to return their deficits to below 3.0 percent of gross domestic product, citing worsened economic conditions.

Malta has until 2011 and Lithuania, in the forefront to become the 17th country to take up the euro currency, gets until 2012.

Almunia also warned that Hungary and Latvia "need to pursue their efforts to ensure this really happens."

Both Hungary and Latvia have been in receipt of heavy international bailout support from the European Union and the International Monetary Fund, but were said to have "complied" with restrictive conditions. Their deadlines remained unchanged, also 2011 and 2012 respectively.

"Hungary and Latvia, which are benefitting from conditional balance-of-payments support, seem on track to bring their deficits to below three percent by the agreed deadlines but they need to pursue their efforts to ensure this really happens," Almunia underlined.

The commission was particularly concerned by prospects for Latvia, whose constitutional court last month struck down pension cuts that form a key plank of its austerity drive.

Nevertheless, the report offered a semblance of calm for EU leaders who have begun to panic over runaway debts especially in Greece but also in Portugal, with continental big-hitters France and Britain also running unsustainably high public overspending, according to analysts.

Twenty out of the EU's 27 nations are running deficits above the threshold, after the deepest global recession since the 1930s wreaked havoc with public spending due to inflated economic pump-priming, higher social security outlay and reduced tax takes.

Various deadlines of between 2011 and April 2015, in the case of Britain, have been set.

Two of them, Romania and Poland, who were originally granted until 2012, are being tested for compliance with new recommendations due for them within weeks.

Brussels will also issue its reaction to Greece's initial implementation of promised austerity measures, "probably on February 3," according to a commission spokeswoman.

Commission assessment on Malta, Lithuania, Hungary and Latvia