Over the past three years, the Government managed to significantly mitigate and modify the adverse effects of the financial crisis, Minister for National Economy Mihály Varga said in Békéscsaba, at the 51st Economist Congress.

At the three-day event with some 400 participants, Mihály Varga called it a huge achievement that the country has managed to reimburse a large amount of maturing foreign currency government bonds.

The Minister reminded the audience that in the first quarter of 2013 Hungary had exceptionally sizable government bond reimbursement obligations which the country repaid without taking out another IMF loan. “We returned to the market after a hiatus of one year and a half, and we managed to raise funds at remarkably favourable yields.

He also said that the central bank base rate may decrease to around 3.0 percent – in line with estimates of international analysts – which is expected to substantially improve the financial position of the budget, too.
Regarding inflation, this year surprised also the Government, and as a result of a brighter inflation outlook they calculate with an inflation rate of 2.4 percent for the coming year, the Minister stressed.

After 2004, Hungary’s general government deficit had not dipped below the 3 percent mark until 2011 and 2012, when the deficit was cut remarkably, and thanks to Government efforts the Excessive Deficit Procedure against the country was lifted in 2013. As a consequence, the country is no longer cut off from EU funds which are essential for stimulating investment, Mihály Varga added.

The Minister also mentioned that the government debt-to-GDP ratio of the country could be lowered, and thus an upward trend was arrested which in 2005-2010 had been “frightening”, and this development was also instrumental for gradually regaining market confidence.

Along with reducing the level of general government debt, the stimulation of employment was also among the Government objectives in 2010. At that time, 3.8 million people were in employment, while this figure is almost 4 million this year, which signals a shift in the right direction, the Minister said.
He also emphasised that people working abroad also have a key role to play, as they remitted 1.7bn euros to Hungary, which also assisted the country’s economic consolidation.

(Ministry for National Economy)