EU threatens action against Hungary over deficit

As a result, the commission will take the next step in its excessive deficit procedure against the country.

The commission said Hungary's deficit had only remained within the target 3% of GDP in 2011 thanks to one-off measures and expected the same in 2012.

International lenders are expected to demand tough conditions from Hungary this week in exchange for new loans.

Analysts say Prime Minister Viktor Orban will have to give up some of his unconventional policies, which have included big taxes on banks and what amounts to a nationalisation of pension funds.

The nation received an IMF-led bailout in 2008, but Mr Orban ended that deal, which had been agreed under the previous government, last year.

However, since then the government's total debt has risen to 82% of its output, while its currency, the forint, has fallen to record lows against the euro, leading to the country requesting "a new type of co-operation" with the IMF; Kazinform cites BBC.

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