A senior official of the European Union (EU) said Wednesday Hungary could be weaned off EU development fund as the country had taken "no effective action" to contain its budget deficit.

"Hungary has not taken effective action" to control its excessive deficit, EU Commissioner for Economic and Financial Affairs Olli Rehn told a press conference.

While admitting that the EU cannot impose a financial sanction against Hungary as the country is not a member of the eurozone, Rehn warned that the EU could cut off its long term-term aid, which is accessible to poor EU states, to the country.

"As Hungary is not a member of the euro, it won't face the prospect of a financial sanction," said Rehn. "It could nevertheless face a suspension of commitments from the cohesion funds from next year, from January 2013 onwards," he added.

Hungary's deficit had exceeded the EU threshold of 3 percent of gross domestic product since the country joined the EU in 2004, before it was expected to run a surplus in 2011 and keep its deficit below 3 percent.

Rehn said efforts to reduce the Hungarian deficit in 2011 were due to "one-off measures" and without them, the deficit would have been 6 percent of economic output.