* Hungary cbank sees 2010 budget gap at 4.3 percent/GDP
* Use of reserves could allow 3.8 percent target to be met
* Govt says will use reserves to defend target if needed
* Hungary's c/a deficit seen sharply lower in 2009, 2010
(Adds finance ministry comments in paras 5-6.)
BUDAPEST, Nov 25 (Reuters) - Hungary's central bank (NBH) said on Wednesday the country's 2010 budget deficit would hit 4.3 percent of gross domestic product (GDP) unless the government used reserves to keep it on target at 3.8 percent.
The bank raised its base forecast for the 2010 deficit to 4.3 percent from 3.7 percent in its quarterly inflation report.
However, the bank said the government was likely to be forced to use most of the reserves set aside in the budget, totalling 0.6 percent of GDP, to try to meet an original deficit target of 3.8 percent of GDP agreed with the IMF and the EU.
"Next year, by cancelling the largest part of the available effective reserves ... the 3.8 percent deficit target may be attained," the bank said in a section of the report spelling out different risk scenarios.
A finance ministry spokesman said the reserves in the budget which cannot be spent on other purpose than on preventing a deficit overshoot amounted to 148 billion forints ($738.4 million) or 0.6 percent of GDP, and would be used if needed.
"This cannot be spent on anything else... We can use it only if budget trends are different from what we planned," Ferenc Pichler told Reuters, adding that the budget also contained an additional general reserve of 57 billion forints.
The central bank said in the report that local governments were likely to post a bigger deficit in 2010 than earlier thought while cuts in state subsidies to state railways MAV would save less money for the government than earlier expected.
It also said personal income tax revenues could undershoot targets.
The deficit goal has been agreed with the International Monetary Fund and the European Union as a key condition of continued access for the country to financing secured last year.
The NBH expects a deficit of 4.0 percent for this year, which would be a slight overshoot of the 3.9 percent target.
It said upside and downside risks to its 4.3 percent forecast for next year were near symmetrical, but added that the debt of state firms and other state obligations, totalling a combined 2.7 percent of GDP, created substantial long-term deficit risk.
However, Hungary's reliance on external financing, which forced the country to resort to IMF aid to prevent a meltdown of its markets last year, has decreased significantly, the bank said in the report.
It sharply reduced its current account deficit forecasts, to 0.5 percent of GDP from 2.9 percent for 2009 and to 1.5 percent from 3.0 percent for 2010.
"The economy's recession has caused a drastic fall in the external financing need and based on the NBH's forecast, the Hungarian economy can be financed without net external funds," the bank's Monetary Council said in a statement on the report.
It also said that economic contraction, which the bank sees at 6.7 percent this year, would keep inflation low in the long term.
The bank cut its interest rates by 50 basis points to 6.5 percent on Monday. (Reporting by Sandor Peto, editing by Stephen Nisbet) ((sandor.peto@thomsonreuters.com; +36 1 327 4744; Reuters Messaging sandor.peto.reuters.com@reuters.net)) ($1=180.11 Hungarian Forint)