S&P raised its forecast for real economic growth in Hungary to an average of 2.5 percent a year in 2015-2017 from earlier expectations of 2 percent a year. It also said a recent decision forcing banks to convert mortgages in foreign currencies, mainly the Swiss franc, to Hungarian forints reduced Hungary’s vulnerability to potential external shocks.

Hungary’s situation warrants an upgrade by credit rating agencies, as over the past years the country’s current account has posted massive surpluses, general government budget deficit has been below 3 percent for years, economic growth has been picking up and employment shows steady improvement, economy minister Mihály Varga said on Friday at the Hungarian Business Leaders Forum held in Budapest. In his presentation, Mihály Varga pointed out that back in 2010 Hungary was often compared to Greece, due to debt and other issues.

And while Greece has been taking out one loan after the other ever since, this year Hungary will not issue any forex bonds on international markets. To highlight differences between the two countries he added that three-year Greek government bonds yield some 20 percent, whereas comparable Hungarian securities pay 2.1 percent.

Mihály Vargo also said that Hungary’s government was examining the possibility of beginning to reduce value-added taxes by 2018. ”We are preparing for serious changes in the tax system. We are studying whether we can begin to moderate the value-added tax rate in the current parliamentary term”, he said. At 27 percent, Hungary has one of the highest value-added taxes in Europe. Furthermore, the Minister has hinted that personal income taxes could be in the single digits before 2018, down from 16 percent now.

Source: hungarytoday.hu

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