"The central bank is incapable of cooperation" - says Hungary's Economy Minister

Economy Minister Márton Nagy has lashed out at the management of the central bank, claiming that they did not provide any professional feedback on the competitiveness strategy prepared by the ministry and already adopted by the government, but issued a statement criticising it.

The statement Nagy refers to was in fact a 49-page document (unavailable in English, unfortunately). The key messages of the central bank in relation to the government's 2024-2030 competitiveness strategy were the following:

• The Competitiveness Strategy aims at improving Hungary's competitiveness and catching up with its economic development in the spirit of re-industrialisation.
• Almost 80 percent of the sectoral proposals in the Strategy are conceptually in line with the competitiveness turnaround proposals made in previous MNB papers.
• However, the objectives outlined in the Strategy focus primarily on quantitative factors of economic growth, with much less emphasis on qualitative factors of competitiveness.
• The macroeconomic path is not consistent with the realities of economic history and the nature of the economic challenges facing Hungary.
• The development goals outlined in the Strategy are intended to achieve change at the level of general slogans, and structural reforms to improve the competitiveness of the Hungarian economy in the 21st century are not very visible.
• The Strategy cannot be considered as a comprehensive economic policy programme to support the competitiveness turnaround in a complex way. 80 percent of the key areas of the competitiveness framework examined by the central bank are either not covered or only touched upon.
• The implementation plan and the financing plan assigned to it are not presented in the document. The government has delegated the development of concrete measures to the relevant ministries.

"In the government's view, it is not a problem in itself that someone is analysing the competitiveness strategy, but nowadays everyone has a phone and it can be picked up", Márton Nagy told Index after an event in Budapest.

According to the minister, people were right to believe that the relationship between the central bank and the Ministry of National Economy had been consolidated by April (as there was a personal meeting and a joint photo, and it was decided that they would consult regularly, leaving behind previous disagreements - ed.), and that the experts would discuss their professional differences in the background, backed up by arguments.

"They don't just throw it out into the market, publicly. Moreover, there is regular consultation between the two institutions." Then Márton Nagy said:

"This means that the central bank is not able to cooperate, and we have been looking in vain for the opportunity to do so. We see that there is an attitude there which is basically about the National Bank of Hungary sending messages in the media. I served seven years at the central bank with the Governor, and eighteen in total. We believe that the tone that prevails there today is unworthy of the institution. And the responsibility for this lies with the management of the central bank."

Márton Nagy also stressed to the portal that the government believed that the relationship between the central bank and the ministry would be put on a more consolidated and forward-looking path. He said, "Keeping in mind the interests of the national economy, we have sincerely sought to improve the relationship between monetary and fiscal policy, even in times of crisis.

"We have our own views on how the central bank works. We disagree, for example, with the interest rate policy or the operation of the toolbox, including the Discount Treasury Bill, but we do not bombard the media with our criticisms. We carry out our work in the ministry with due humility and I expect the same from my staff".

Read our critical analysis of the government's economic policy, including the competitiveness strategy below.

Cover photo: MTI Photo/TamásPurger