Hungary will keep its 3.8pc-of-GDP deficit target for 2010, as it has promised the IMF, but the contract expires in October, thus there is no need to negotiate long-term questions with the organisation, Mr Orban said, after a two-hour meeting with Ms Merkel.

    "Afterward, we will negotiate with the EU on how to reduce Hungary's fiscal deficit from 3.8pc of GDP to under 3pc," he said. Next year's budget will be formed based on talks with the EU, he added.

    The suspension of talks between the government and delegations from the IMF and EU on the conditions of Hungary's financial aid package has no impact on Germany and Hungary's economic ties, Ms Merkel said. She expressed hope that Hungary would remain on the path of stability in the long term, adding that starting out with a 3.8pc-of-GDP fiscal deficit target for 2010 was advantageous.

    National Economy Minister Gyorgy Matolcsy said on Monday the missions from the IMF and EU supported the government's goal to meet the 3.8pc-of-GDP deficit target for 2010 and bring the gap under 3pc in 2011, but they did not approve of an extraordinary financial sector tax that is expected to generate HUF 200bn in 2010. "They don't like the bank levy, however, this HUF 200bn of the bank levy will consolidate the Hungarian budget," he said.

    Asked about the bank levy by MTI at the press conference on Wednesday, Ms Merkel, as well as Mr Orban, called the introduction of the tax important, but Ms Merkel spoke about it as a type of crisis prevention measure, while Mr Oban said it was an immediately necessary step to reduce the deficit and ensure growth.