The National Bank announced a 500 billion-forint programme, including interest-free funding for commercial lender, to boost corporate borrowing, and said it would use about 10 per cent of its foreign-currency reserves to cut the country’s short-term external debt.

In its front page editorial, Népszabadság describes the package as a swift but guarded move. ”The new president is a hasty but cautious elephant in the china shop.” The left-wing daily admits that Mr Matolcsy was keen on not taking too much risk, but has doubts about what impact his package will actually have on investment. If the main problem hindering economic growth is the shortage of credit, then the program will be a success. But it is bound to be stillborn if growth is hindered mainly because Hungarian enterprises are not credit-worthy enough.

In Magyar Nemzet, Tamás Nánási argues that the National Bank has so far sustained heavy losses by paying high interest on the deposits of the commercial banks. That is over now, he continues. “Now it’s the citizens’ turn.” He also remarks that Mr Matolcsy’s package is by no means unorthodox in nature. On the contrary, it was modelled on the “funding for lending” programme introduced by the Bank of England.

Source: BudaPost

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