National Bank Governor Plugs Away at Arguments for Fiscal Tightening

  • 20 Jul 2021 7:14 AM
  • Hungary Matters
National Bank Governor Plugs Away at Arguments for Fiscal Tightening
National Bank of Hungary (NBH) governor György Matolcsy reiterated and refined arguments for reining in next year’s budget deficit in an op-ed piece published on the website of daily Magyar Nemzet on Monday.

Matolcsy has said a number of times that the government’s 5.9%-of-GDP budget deficit target for next year is too high, while stressing that the central bank continues to move forward in a strategic alliance with the government, in spite of differences on the matter.

In the piece, Matolcsy said the more fiscal resources a state puts toward achieving recovery, the smaller the chance the return to economic growth will be sustainable, and he warned that “tipped balances will force fiscal austerity with time”.

Matolcsy said the faster fiscal balance is achieved, the faster resources outside of the budget become available to support sustainable growth.

He noted that Hungarians have some 44 billion forints (EUR 122m) in financial assets that can be mobilised for the recovery, pointing out that the share of government securities held by domestic retail investors, at close to 25%, is well over the 2% average rate for the region.

“The lion’s share of the financial resources necessary to return to a path of balance and convergence is available in Hungary.

 Those resources will only become available if we first crack inflation and set the fiscal deficit at around 3% (3-3.4%), and keep it under 3% from 2023,” Matolcsy said.


MTI Photo

  • How does this content make you feel?

XpatLoop Media Partner

Hungary Matters

Launched in January 2014, this newsletter published on week days covers 'everything you need to know about what’s going on in Hungary and beyond', according to its publisher the state media agency MTI.

Explore More Reports

  • Hungarian Opinion: Hungary’s Economic Record & Outlook

    Hungarian Opinion: Hungary’s Economic Record & Outlook

    • 7 Jul 2021 12:54 PM

    A conservative economist believes that Hungary’s growth rates confirm the government’ economic policies. Another analyst notes that Hungary is still lagging behind most new EU member states in terms of economic development.

  • 'Now Not the Time for Budget Cuts', Says  Finance Minister

    'Now Not the Time for Budget Cuts', Says Finance Minister

    • 5 Jul 2021 5:26 AM

    Economic policy should be focused on supporting investments, creating jobs and recovering capacities lost to the crisis caused by the coronavirus pandemic, Hungary’s finance minister said after a meeting with his Visegrad Group counterparts in Warsaw.

  • Wage Growth at 10.1% in April

    Wage Growth at 10.1% in April

    • 1 Jul 2021 9:16 AM

    Wage growth in Hungary increased by an annual 10.1% in April, picking up from 8.7% in the previous month, the Central Statistical Office (KSH) said.