As the Minister explained, so far this year Hungary has not issued any foreign currency denominated government securities, while the Government, could still obtain all the 4600bn forints needed as financing requirements for 2012.

Speaking at the radio station, György Matolcsy also said that “the conservative and successful financial consolidation (carried out in the past two-and-a-half years) ensures that the excessive deficit procedure against Hungary will be lifted”. In his opinion “the procedure must be abrogated as each and every economic figure signals that the country has corrected the huge blunders committed in 2004-2010.” He stressed, however, that one can only be certain after the Brussels’ verdict is announced.

The Minister for National Economy emphasized: Hungary may no longer afford a runaway budget deficit, adding that the Government would not risk the goal of having the excessive deficit procedure abrogated.

As Minister Matolcsy said, in coming months several large-scale reforms can be expected. Among them will be the tertiary education reform, kick-starting investments and economic growth, giving a powerful boost to competitiveness as well as working out an EU development strategy based on innovation, R&D and creative industrial sectors which would at last enable Hungary to utilize EU subsidies – estimated at 7-8 thousand billion forints in 2014-2020 – in a way which would create well-paying jobs.

The Minister signalled that a new strategic alliance shall be established between the Government in general and the Ministry for National Economy in particular and the new management of the National Bank of Hungary.

He also stressed in the interview that he had not been offered the post of note bank president to become vacant in March, adding that a strong alliance between the central bank and the Government will provide significant safety, “as it does everywhere”, for the Hungarian financial system. “It is quite obvious for everyone that cooperation between the Government and the note bank is less optimal nowadays than it could be.”

The Minister explained that one element is missing which could underpin the assistance of the Hungarian banking system in aiding the Government to ignite growth. Banks can contribute by more lending, while the note bank has “at least 12-16” instruments to deploy. These tools are already being used by the European Central Bank, the Fed or the British Central Bank, he said, remarking that according to the famous economist, John Maynard Keynes, a note bank is obliged to equally consider the aspects growth, inflation and employment.

Speaking about the budget of next year György Matolcsy said, “I expect that by the middle of next year Hungarian economic performance will exceed the figures projected for next year – which numbers have been planned cautiously, while aiming for stability, very conservatively, with extreme foresight.” This development will be visible in June-July in case first quarter data confirm the expectation that recovery will not be small but indeed large-scale regarding investments and growth, he added.

In the opinion of the Minister in case the 2013 budget needs to be amended, that “will be a sustainable, good change”, because if growth is faster, higher revenues will enable that a wage increase scheme for teachers, costing 73bn HUF, can be implemented and “we may even add to the income of families”.

Among signals indicating a promising macroeconomic trend reversal György Matolcsy mentioned that next year three large German motor industry investment projects will be completed in Hungary which “will alone add about 1.1 percent to overall (GDP) growth”. He also identified renewed bank lending as a powerful growth resource. “There are some signs of that already”, he said.

He also underlined that the new management of Eximbank embarked on full-speed export credit lending. Eximbank has already secured resources of 500 million USD and it will channel this amount to the economy in the coming months. But other banks also show signs of renewed export-related lending, lending for own funds for EU projects or housing projects. Responding to Government criticism, György Matolcsy had the following to say, “I am glad we stuck to our guns” and did not change the economic policy started in 2010. In his words, “I had neither the time nor the inclination to grow unsure. Fortunately, the Prime Minister supported and stood up for me every single day and week and month and that has encouraged me a lot.”

With regard to euro introduction he pointed out that the level of development that the country needs to reach before it is ready to join the euro-zone is 100 percent of the EU average. In case it can be achieved in 2025 or 2035 is great news, but eventually Hungary must join, as this is what the country had undertaken. He emphasized that “we must continue with our creative economic policy, because that is the only way to close the gap with others.”

Source: kormany.hu