By Gergely Szakacs and Marton Dunai
BUDAPEST, May 10 (Reuters) - Hungary will take new steps to persuade the European Commission that it can keep its deficit below 3 percent of economic output this year and next - even though it believes the measures are unnecessary - the government said on Friday.
Hungary has been under the EU's so-called Excessive Deficit Procedure (EDP) ever since joining the bloc in 2004 and risks losing vital development funds if it fails to convince Brussels that it has got its fiscal house in order.
The government said it will immediately freeze some 93 billion forints ($415 million) at ministries and other public institutions for 2013 and 2014. It may also suspend financing some public investments later if needed to help get the country off the EU's list of fiscal offenders.
But it insists it has been subject to double standards by Brussels and has criticised the EU for what it considers fiscal miscalculations.
'The additional adjustment measures expected by the European Commission are entirely unnecessary,' government spokesman Andras Giro-Szasz told a news conference.
The two measures could improve the budget balance by 150 billion forints next year, or 0.5 percent of economic output.
The EU has forecast Hungary's deficit rising to 3.3 percent of gross domestic product in 2014 from 3 percent this year, compared with Hungary's 2.7 percent estimate for both years.
Economy Minister Mihaly Varga told a news conference the government disputed the Commission forecast and thought extra measures were unnecessary but would take them step by step.
'The order of the measures is important. We reckon that these steps will satisfy the Commission's criteria,' he said.
As a third and final step the government will consider increasing the special tax it has levied on banks and energy companies and may also raise a financial transaction tax if the Commission still doubted it can reach its targets, Varga said.
'The message to the EC combined with the political communication about perceived unjustified austerity demands from Brussels seems to be clear: If the EC remains reluctant to lift the EDP, the government may continue to charge majority foreign-owned large corporations and banks further,' said Eszter Gargyan, an analyst at Citigroup.
The government has until June 22 to convince the EU, which will decide in a meeting of finance ministers whether to end the deficit procedure against Budapest. One analyst said the first two measures should be enough to convince the European Union.
'That would allow Hungary to exit the EDP by early summer,' Raiffeisen Bank analyst Zoltan Torok said. 'It is important to note that these fiscal adjustments are not unorthodox ones and have relatively small negative growth impact.' ($1 = 223.85 Hungarian forints)
(Reporting by Gergely Szakacs and Marton Dunai; Editing by Hugh Lawson) Keywords: HUNGARY BUDGET/
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