Three crucial snippets on fiscal viability, structural policies and the forint's exchange rate outlook

HUNGARY - In Brief 24 Nov 2014 by Istvan Racz

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Fact: In this post, we report on three, relatively lightly reported episodes of Hungarian economic policy, which are more closely connected to each other than they might appear at first glance. These are: 1. On the periphery of the ongoing budget debate, parliament is discussing a draft government proposal on the 'protection of the assets' of the remaining compulsory private pension funds - those few die-hards, which survived the nationalisation of pension fund assets in March 2011. The likely approval of this draft would effectively imply the liquidation of all the remaining pension funds and the collection of their assets by the government Treasury, while fund members would be transferred back into the social security pension scheme. 2. In his usual Friday morning interview on Radio Kossuth, PM Orbán said that he might overshoot his 'promise to the people' (=target) to secure a 50% share of domestic control over the Hungarian banking system. He said he might be able to deliver a 60% domestic control share eventually, adding that the government was negotiating on the acquisition of further foreign banks (meaning: in addition to the recently acquired MKB Bank). 3. Regarding the widespread discontent of the debtors of FX-denominated bank loans to households that the government is proposing to convert their debt into HUF debt at market exchange rates (meaning: with no major subsidy in addition to what they will be able to realise out of the upcoming compensation payments from banks), Economy Minister Varga said a few days ago that the conversion rate that was fixed on 7 November is likely to appear favourable for the debtors at the time when the conversion will actually ...