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Government accused of meanness

August 27th, 2020

A left-wing author condemns the government’s frugal policy in the midst of the coronavirus crisis, while a business website ponders whether monetary easing can be expected when public deficits reach record levels.

in Népszava, András Törő finds it absurd that when second quarter statistics show record slumps in production and sales levels in Hungary, the government refuses to keep an open-ended assistance package at the disposal of enterprises and families. Törő thinks the government should extend the current three-month duration of unemployment payments, and also offer wage compensation to parents who have to remain at home if their children can’t attend school on account of coronavirus regulations. What if the second wave of the pandemic explodes? he asks.

In its monetary policy analysis, Portfolio attributes a new monthly high in Euro/Forint exchange rates to market expectations that the government is preparing a wave of monetary easing.  As a first step, the National Bank is buying a further package of government bonds. The government has little room for manoeuvre, Portfolio writes, as inflation is just under 4 per cent and may suddenly surge well over regional levels, while the public deficit is now expected to be between 7 and 9 per cent this year,  bringing back the debt ratio to over 70 per cent, and cancelling out the results of half a decade of frugal fiscal policy.

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