The Hungarian government has been urged to reverse controversial plans to curb the independence of its central bank in order to secure a multibillion-euro loan from the International Monetary Fund and the European Union.The forint hit a record low on Wednesday and Hungarian bond yields soared, prompting economists to warn that Budapest must act swiftly to restore market confidence and avoid inflicting financial pain on the nation of 10 million. In response to the rapidly worsening situation, the Hungarian government said it might moderate some policies to appease international lenders, who are unhappy over a new law curbing the independence of the central bank. The IMF is also displeased with new legislation that requires a two-thirds parliamentary majority in order to change the 16% flat income tax rate brought in by the current government. "We are ready for talks without preconditions, all issues can be on the table," minister Tamás Fellegi was quoted as saying in the weekly Figyelo. As the government's chief negotiator, Fellegi is due to visit Washington next week in an attempt to reach an agreement on a credit line with the IMF and the EU. IMF officials have reportedly refused to negotiate with Hungary's erratic economy minister, György Matolcsy, who justifies his unorthodox economic policies by saying he is "working from an economics textbook that has not even been written yet". The prime minister, Viktor Orbán, who is nicknamed the Viktator by his critics for his authoritarian leadership style, has called his economics minister "my right hand. Nobody could name a high enough sum for which I would be willing to give up my right hand." Jánoz Lázár, parliamentary leader of the ruling Fidesz party, has told local media that Hungary would repair its relations with the EU and IMF – but was not ready to roll over and submit to all demands. "I am sure we will come to an agreement, but we will exchange a few punches in the meantime," he said.
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Friday, January 6, 2012
The Hungarian government has been urged to reverse controversial plans to curb the independence of its central bank in order to secure a multibillion-euro loan from the International Monetary Fund and the European Union.The forint hit a record low on Wednesday and Hungarian bond yields soared, prompting economists to warn that Budapest must act swiftly to restore market confidence and avoid inflicting financial pain on the nation of 10 million. In response to the rapidly worsening situation, the Hungarian government said it might moderate some policies to appease international lenders, who are unhappy over a new law curbing the independence of the central bank. The IMF is also displeased with new legislation that requires a two-thirds parliamentary majority in order to change the 16% flat income tax rate brought in by the current government. "We are ready for talks without preconditions, all issues can be on the table," minister Tamás Fellegi was quoted as saying in the weekly Figyelo. As the government's chief negotiator, Fellegi is due to visit Washington next week in an attempt to reach an agreement on a credit line with the IMF and the EU. IMF officials have reportedly refused to negotiate with Hungary's erratic economy minister, György Matolcsy, who justifies his unorthodox economic policies by saying he is "working from an economics textbook that has not even been written yet". The prime minister, Viktor Orbán, who is nicknamed the Viktator by his critics for his authoritarian leadership style, has called his economics minister "my right hand. Nobody could name a high enough sum for which I would be willing to give up my right hand." Jánoz Lázár, parliamentary leader of the ruling Fidesz party, has told local media that Hungary would repair its relations with the EU and IMF – but was not ready to roll over and submit to all demands. "I am sure we will come to an agreement, but we will exchange a few punches in the meantime," he said.
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3 comments:
I am in Malaysia and the Philippines . with businesses in both.
How did you get the strange idea its a disaster for us.
My currencies I use have risen in value against the pound such that for the pound to regain its value to my currencies it would have to rise almost 60%.
Buying from the UK and shipping UK jobs out here as I do has had enormous benefits for me. Add in the fact that when I make profits its totally tax free as far as the UK is concerned and local taxes are virtually non existent, so income I genereate here can now get me well over double compared to 3 years ago of what you can buy in the UK with your heavily taxed and NI pounds.
Quite the contray . from the UK you now pay me more pounds after your taxes have have taken almost 75%, I have no VAT unlike you and I am still far and a way more competitive than any UK based company.
And if for some strange reason I got the urge to visit the UK , to me me it would now be like it was going to greece for a brit.
Just a cheap holiday destination.
But one with no attractions
In 1989, as the Communist system was disintegrating, I was driving back to Budapest from a meeting in the countryside with Viktor Orbán, now the prime minister of Hungary. It was dark, and we were on a narrow road. Orbán’s driving style was to stand on the accelerator of his Lada.
Suddenly, in the middle of the road, a Russian soldier appeared, waving a lantern in the internationally recognised signal for “stop”. Hungary was still under Soviet military occupation then. Orbán didn’t stop, he tried to summon up extra weight to put on the accelerator. The soldier dived into a hedge.
“What was all that about?” I asked.
“He wanted us to buy him some vodka.” The countryside, apparently, was full of Russians wandering around begging or selling military equipment for booze. Not only did Orbán not slow down, he didn’t even think about slowing down. His attitude hasn’t changed much since then.
The ride is certainly getting bumpy now with traders bailing out of the Euro and into the USD and Sterling as fast as they possibly can. The Euro did manage to maintain strength well past when it should have, but the decline has now begun in ernest.
I know that means better export conditions for Europe, but it will also mean inflation in particular due to oil being denominated in dollars.
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