* Budget deficit could sharply exceed govt target in 2010
* Fidesz sees big tax cuts from 2011 to boost economy
* Cbank did not perform well during crisis -Fidesz
(Adds details, comments)
By Krisztina Than and Sandor Peto
BUDAPEST, Nov 25 (Reuters) - Hungary's main opposition party Fidesz, widely expected to win elections in early 2010, will aim to set a euro adoption target date by the end of next year because markets need an anchor, a top Fidesz policy maker said.
Mihaly Varga, former finance minister and a top economic advisor in Fidesz, told Reuters on Wednesday that Hungary's budget deficit could come in at 7.0-7.5 percent of gross domestic product (GDP) next year mainly due to one off spending items not included in the present draft budget.
The government's deficit target agreed with the IMF and the European Union for next year under a key financing deal is 3.8 percent, and the central bank, which sees a deficit of 4.3 percent, has said the government would have to use most of its reserves to meet its target.
Varga said the deficit could fall to around or below 4 percent of GDP in 2011 as an economic recovery takes off.
"I believe it's more important that by the end of 2010 we should be able to announce a euro target date," Varga said.
"Such economic policy should be launched ... which can give fixed points for market players and tries to stick with those."
Varga said euro target dates had been changed several times under Socialist governments since 2002 which had eroded confidence. The country meets none of the euro entry criteria at the moment.
When asked if the present median analyst forecast in a Reuters poll for Hungary joining the euro zone in 2014 was realistic, Varga said:
"If I look at today's situation I feel it's a bit optimistic but if analysts asked by Reuters reckon with an expected change in government in Hungary, then I feel it's realistic."
"Fidesz does not yet have a target date as we need to take stock (after elections next year) ... but I personally trust very much that 2014 could be a realistic date."
Centre-right Fidesz, which last ruled between 1998 and 2002, is expected to win by a landslide in parliamentary elections due in April or May 2010 based on opinion polls, which show Fidesz having three times the support of the ruling Socialists.
TAX CUTS
Varga said Fidesz planned to implement sizeable tax cuts as of January 2011 to give a boost to the economy.
"Our main economic policy goal in the next government term will be establishing jobs. To meet that, the only tool we can see is cutting taxes," Varga said.
He said significant tax cuts could temporaily cut budget revenue but a recovery from deep recession this year would help the budget.
Varga said Fidesz has not finalised its tax plans yet but at present the two main options being discussed were a flat tax of below 20 percent which would apply to corporate, value added and personal income taxes, and a form of family taxation.
"I expect only a temporary (revenue) fallout, but obviously there will be items where we will need expenditure cuts," he said, citing lower debt service costs, curbing corruption and cutting state administration costs as examples for budget cuts.
Varga also criticised the central bank over its handling of the economic crisis, and for not cutting interest rates quickly enough this year when the global situation improved.
"Compared to the situation in autumn 2008 and early 2009, I think the central bank went to the other extreme now and has become hyper cautious and perhaps takes steps later than it could have done due to the improvement of the situation."
The bank, which had to hike interest rates to as high as 11.5 percent last October to stem the forint's fall, has gradually trimmed rates to 6.5 percent now. (Reporting by Krisztina Than and Sandor Peto; editing by Philippa Fletcher) ((krisztina.than@reuters.com; tel +36 309 865 969; rme krisztina.than@reuters.com.net))