* Hungary aims to meet ERM-2 terms this year-PM
* Hungary PM says ready to cut spending further
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BUDAPEST, March 6 (Reuters) - Hungary should aim to meet conditions of entering the Exchange Rate Mechanism (ERM-2), the waiting room for the euro, this year, the prime minister said.
"There is above all a shorter term common goal, namely, that whatever we do should on the whole make it possible that already this year Hungary meets all criteria that are needed to enter the ERM-2 regime," Prime Minister Ferenc Gyurcsany told a meeting of business leaders on Friday.
Gyurcsany reiterated that Hungary should draw up by the end of September at the latest a credible and sustainable road map for the fastest possible adoption of the euro.
To join ERM-2, a country must get the approval of the Economic and Financial Committee (EFC) -- an EU body composed of officials from the executive Commission, deputy central bank governors and deputy finance ministers.
This process usually takes several months and final decisions on ERM-2 entry and the central parity rates are taken by the EFC.
Gyurcsany also said the government was ready to consider deeper and more comprehensive reforms than the measures laid out last month to revive the economy and stem job losses through a tax reshuffle and spending cuts.
Hungary's government expects the economy to contract by up to 3.5 percent this year due to a collapse in demand in the euro zone. However, some analysts said the downturn could be even greater if the recession in western Europe is entrenched.
"If Germany contracts by 5 percent then entire Europe looks different. If Europe looks different then we look different as well," Gyurcsany said in reference to a recent analyst projection.
"Our current proposals keep Hungary on a balanced (budget) path if the recession comes in at around 3-3.5 percent. If it turns out deeper, then we will definitely have to think hard."
The government plans to cut the budget deficit below 3 percent of the economy this year from around 3.3 percent in 2008. It has already decided to cut about 200 billion forints ($809 million) worth of spending this year to prevent an overshoot.
Gyurcsany added that the government was ready cut state spending further after calls by some local economists for bolder spending side reforms.
"I agree that we need to cut spending further, we should do this primarily in the area of state operating expenditure," he said.
(Reporting by Gergely Szakacs; Editing by Victoria Main)