“Nevertheless, external and public debts remain high, thus making the economy susceptible to shocks; and the country faces subdued growth prospects,” the staff added. It noted that the government’s strategy to address these challenges had included “a sizable fiscal consolidation and unconventional measures that increased the state’s role in the economy and shifted the burden of adjustment to specific sectors”.

The staff recommended measures to support the financial sector, including steps to facilitate a faster resolution of nonperforming loans and to reduce the tax burden on banks. They added that the National Bank of Hungary’s Funding for Growth Scheme, which makes cheap credit available to SMEs, should “remain limited, targeted, and time-bound, with fiscal costs clearly recognized”.

State secretary for tax and finance Gábor Orbán said that IMF’s observations show the fund acknowledges the obvious results of the government’s efforts, such as the stronger economy, the recovery from the recession, the big current-account surplus and disciplined fiscal policy.

He added that the IMF’s stand on goals for the future was close to that of the Hungarian authorities’, even if they may differ on the way these goals are achieved.
 
Source www.hungarymatters.hu 
 
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