IMF-EU agreement no panacea on its own

Speaking at the 20th annual forum organized by the German-Hungarian Chamber for Industry and Commerce he concluded that yields of Hungarian sovereign securities may be lower and bond market confidence regarding Hungary may increase as a consequence of the deal. On the other hand, there are several issues which Hungary has to solve, as the agreement on its own will not result in higher growth, a more productive economy, higher payroll numbers or a more efficient public sector. In the opinion of the Minister of State recent Hungarian macro-economic achievements have met with a mixed reception: while financial and bond markets have appreciated them, reactions from Brussels were sometimes just the opposite. “It appears as if over there our economic situation was perceived to be much worse and that is aptly reflected in the excessive deficit procedure”, he said. However, certain progress has been made by the EU, as two years ago the implementation risks of economic policy measures were judged to be much higher, and the risk indicator of 50 percent at that time was reduced to close to 33 percent, he added. In his speech he emphasized that the “sine qua non” of igniting growth is economic stability. Of equal importance, he added, is implementing reforms necessary for improving competitiveness. The fiscal adjustment measures of the Government announced in October cover three fields: one-third of them are aimed at creating a more efficient public administration, another third target greater economic transparency and the last one-third are the tools for a more optimal sharing of risks and burdens. “What Brussels can comprehend of this all is that there are some additional revenues expected from greater transparency, but they are not precisely calculable,” he said. Minister of State Cséfalvay said: Hungarian economic policy must maintain a declining debt path and it has to make efforts to create a smaller state apparatus and to achieve a lower redistribution rate and a more transparent economy. In addition, the taxation system must be stabilized and the economy needs demand-side measures such as the Job Creation Action Plan.

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