* Govt budget deficit target of 1% of GDP no longer sustainable
* Reserves worth over 400 bln forints
* Shortfall could be higher if necessary (Adds detail, more comments)
BUDAPEST, March 26 (Reuters) - Hungary may have to raise its budget deficit target this year as the government revises its 2020 budget to cope with the coronavirus outbreak, the finance minister said on Thursday.
Prime Minister Viktor Orban said on March 10 that Hungary would need to redraw its budgets for 2020 and 2021 and offer major assistance to economic sectors worst hit by the spread of the virus.
Hungary has kept is budget deficit well below the European Union’s 3% target over the past years as Orban’s government worked to wrestle down one of the largest debt piles in central Europe.
“The 2020 Hungarian budget has substantial reserves, so we have resources to tap now as trouble has reared its head,” Varga said in a post on his Facebook page on Thursday.
“However, if this is not enough, sticking staunchly to a deficit below 3% would be a mistake.”
Varga said if measures to protect jobs and resuscitate the economy make it necessary, Orban’s government should raise its budget deficit to create more room for manoeuvre.
Approved last year, the 2020 budget had targeted a deficit worth 1% of GDP, with the same amount of reserves set aside to tackle contingencies. Two weeks ago Varga had said his priority was to achieve a balanced budget as soon as possible.
Orban’s government has since imposed a blanket moratorium on debt repayments through to the end of this year, waived payroll taxes for the first half of 2020 for the worst-hit sectors and launched a number of other measures to shore up the economy.
Analysts polled by Reuters expect the economy to slow to 0.9% this year from nearly 5% in 2019, but some economists say Hungary could sink into a recession.
According to the latest government tally, Hungary has had 261 cases and 10 deaths from coronavirus. (Reporting by Gergely Szakacs; Editing by Raissa Kasolowsky)