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Skirmish between Varga and Matolcsy

September 21st, 2019

As the Minister of Finance and the President of the National Bank disagree on monetary policy, left-wing and pro-government analysts offer diametrically opposing views on the state of the Hungarian economy.

Last week, Minister of Finance Mihály Varga said that the Hungarian economy needs a stable Forint. In response, György Matolcsy, Governor of the National Bank said that the National Bank has no targets concerning the exchange rate of the Forint. In a separate statement, Matolcsy predicted that interest rates will remain low for a long time.

Népszava’s Miklós Bonta castigates the National Bank for not sending clear messages about the Forint as the Hungarian currency hits historic lows against the Euro (see BudaPost, September 4). Bonta thinks that Matolcsy has encouraged speculators by suggesting that he favours a weak Forint.The left-wing commentator acknowledges that the Forint’s exchange rate is mostly determined by external global financial sentiments, but nonetheless finds it highly problematic that the National Bank is failing to send clear and reassuring messages. Bonta admits that a weaker Forint increases Hungary’s competitivity, but calls nonetheless for the introduction of the Euro.

In Magyar Nemzet, Gergely Kiss recalls that critics of the government have predicted the slowing down of the Hungarian economy for years, suggesting that fast GDP growth cannot be sustained. Critical economists believed that this will cause a deterioration in the education and health care systems, devalue pensions, increase inequality and harm the interests of poor Hungarians, Kiss continues. The pro-government columnist claims that none of these dark predictions have come true. As an example, Kiss mentions that the government has offered tens of million in Forints to families in order to boost the birth rate. He adds that the GDP growth was 6.5 per cent in June. In light of these numbers, Kiss finds it unlikely that Hungarians will buy these latest pessimistic projections of the critics of the government.

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