01 November 2012

Hungary: IMF-EU agreement no panacea on its own

According to Minister of State for Economic Strategy at the Ministry for National Economy, Zoltán Cséfalvay, it is obvious that an agreement with the IMF and the European Union can be no cure-all on its own.

There are several issues which Hungary has to solve, as the agreement on its own will not result in higher growth, a more productive economy, higher payroll numbers or a more efficient public sector.

In the opinion of the Minister of State, recent Hungarian macro-economic achievements have met with a mixed reception: while financial and bond markets have appreciated them, reactions from Brussels were sometimes just the opposite. “It appears as if over there our economic situation was perceived to be much worse and that is aptly reflected in the excessive deficit procedure”, he said. However, certain progress has been made by the EU, as two years ago the implementation risks of economic policy measures were judged to be much higher, and the risk indicator of 50 per cent at that time was reduced to close to 33 per cent, he added.

The fiscal adjustment measures of the Government announced in October cover three fields: one-third of them are aimed at creating a more efficient public administration, another third target greater economic transparency and the last one-third are the tools for a more optimal sharing of risks and burdens. “What Brussels can comprehend of this all is that there are some additional revenues expected from greater transparency, but they are not precisely calculable”, he said.

Cséfalvay said: "Hungarian economic policy must maintain a declining debt path and it has to make efforts to create a smaller state apparatus and to achieve a lower redistribution rate and a more transparent economy. In addition, the taxation system must be stabilised and the economy needs demand-side measures such as the Job Creation Action Plan."

Press release

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