Economy
Hungary govt to lace fingers with cenbank on euro, PM sees long yields slide
“We will make proposals that will increase the long-term chances of the Hungarian economy staying in balance," Bloomberg cited Gyurcsány as saying.
“If these two plans come true, there's a chance for long-term interest rates to decline," he added.
Gyurcsány nominated last Friday András Simor, CEO of Deloitte, to take over from central bank Governor Zsigmond Járai when his mandate expires on 2 March. He said today the conditions of co-operation have “greatly improved" by Járai's replacement. Járai was appointed for six years in 2001 by then ruling now opposition party Fidesz and he was a fervent critic of the current Socialist-Free Democrat government and its euro convergence plan.The cabinet raised taxes and slashed subsidies after posting the European Union's largest budget deficit last year (around 10% of GDP). The government, which has missed its deficit target every year since 2001, will propose new budget rules this year to avoid further overruns, Gyurcsány said.
Portfolio.hu opinion
Note that Gyurcsány already signalled a euro co-operation deal with the NBH when he announced Simor's nomination last Friday. We do welcome the idea, which indicates that the central bank may not only agree with the cabinet on the medium-term inflation goal (3% +/-1ppt) but also on a desired date for euro zone accession. While the government earlier targeted 2010 for EMU membership, its latest Convergence Programme, submitted to the EU last December, did not include an exact date anymore.
Outgoing Governor Járai said last week that even 2013-2014, euro adoption dates considered by markets as fairly realistic, could prove to be overly optimistic. According to the latest communication, the cabinet expects switching to the single European currency between 2011 and 2013.
“If these two plans come true, there's a chance for long-term interest rates to decline," he added.
Gyurcsány nominated last Friday András Simor, CEO of Deloitte, to take over from central bank Governor Zsigmond Járai when his mandate expires on 2 March. He said today the conditions of co-operation have “greatly improved" by Járai's replacement. Járai was appointed for six years in 2001 by then ruling now opposition party Fidesz and he was a fervent critic of the current Socialist-Free Democrat government and its euro convergence plan.The cabinet raised taxes and slashed subsidies after posting the European Union's largest budget deficit last year (around 10% of GDP). The government, which has missed its deficit target every year since 2001, will propose new budget rules this year to avoid further overruns, Gyurcsány said.
Portfolio.hu opinion
Note that Gyurcsány already signalled a euro co-operation deal with the NBH when he announced Simor's nomination last Friday. We do welcome the idea, which indicates that the central bank may not only agree with the cabinet on the medium-term inflation goal (3% +/-1ppt) but also on a desired date for euro zone accession. While the government earlier targeted 2010 for EMU membership, its latest Convergence Programme, submitted to the EU last December, did not include an exact date anymore.
Outgoing Governor Járai said last week that even 2013-2014, euro adoption dates considered by markets as fairly realistic, could prove to be overly optimistic. According to the latest communication, the cabinet expects switching to the single European currency between 2011 and 2013.
