Hungarian PM says preparing action to cut debt

(BUDAPEST) - Hungarian Prime Minister Viktor Orban said on Wednesday that in the next few days he will announce action to cut the national debt.

Orban also lowered targets for the coming years in a bid to reduce the public debt to within the European Union limit which sets a maximum target of 60 percent of national annual output.

"At one point over the coming week, I am going to announce a sovereign debt cut worth several percentage points," Orban said in a morning news programme on public radio mr1 Kossuth.

"I would like Hungary to be capable of reducing its debt to under 70 percent in 2012, and bring it closer to 60 percent than 70 percent by the end of the (parliamentary) cycle" in 2014, Orban added.

Until now, the government had targeted cutting the debt to 65-70 percent of gross domestic product by 2014.

Orban pointed out Wednesday that in Europe only "the Swedes and us were able to cut their public debt" in 2011.

The reduction is to be financed by the nationalisation of mandatory private pension funds worth about 2.9 trillion forints.

Hungary cut its sovereign debt by 1.341 trillion forints (5.0 billion euros, $7.2 billion) to 77 percent of GDP in June -- from a previous 81 percent -- by tapping the private pension purse.

The centre-right government almost entirely dismantled the country's mandatory private pension scheme by forcing most of its three million members to return to the state system earlier this year.