BUDAPEST, Jan 16 (Reuters) - Hungary will modify its 2009 budget to account for a drop in revenues from initial targets and will consider tax hikes as a way of covering the revenue shortfall, Finance Minister Janos Veres said on Friday.
"Modifying the budget will definitely be necessary because if the external environment changes so much, because if economic growth is so different in the world, the EU and Hungary than we had expected... then Hungary's budget also has to be adjusted," Veres told television channel ATV.
He added that the revenue shortfall would be lower than 2 percent of the total revenue target so the Socialist cabinet will not need to go back to Parliament, where it governs in a minority, as only a deviation greater than 2.5 percent requires legislative approval.
Veres said that new economic forecasts will be made within the next several weeks and the government will inform Parliament on January 29.
Passing the 2009 budget was a major political risk for the minority government last year but its former coalition ally, the liberal Free Democrats opted to support the budget and lifted the threat of a government collapse and early elections.
Analysts have said that modifying the 2009 budget could become a political risk if legislative approval is required as the Socialists will have to find a temporary ally once again to support its proposals.
Veres would not rule out the possibility that instead of just looking for spending cuts, the government would seek legislative approval for tax hikes.
"We have to examine every possible option to give Hungary the chance to reach an optimal economic path," Veres said. "If anybody says that we can't touch taxes, then he's wrong."
Veres said that some tax changes could serve the interest of economic competitiveness and all options must be debated.
"We'll shift taxes," Veres said. "To cut taxes somewhere, we'll have to find the funds somewhere else in the tax system, which could mean a tax hike for some.
(Reporting by Balazs Koranyi; Editing by Tomasz Janowski)