Economic policy forum

The central interest rate will be systematically decreased, said Ferenc Gyurcsány PM, on the Day of the Entrepreneurs economic policy forum organized by the National Association of Entrepreneurs and Employers (VOSz) last Friday.


We are at the end of the first phase of the crisis but this was the easier part, as the main task was to ensure liquidity and keep the financial intermediator system operating. The PM agreed with those urging the decrease of the central interest rates and added that, from spring systematic reform is need instead of radical steps. In this coming second phase the problem will be the existence or non-existence of markets, Gyurcsány added. “Within the tax system the stimulation of the national market is not possible; what I can see is the stimulation of investments and for that the government already allocated Ft2000 billion in next one and a half years,” the PM continued. In 2009 and 2010 there will be no opportunity for major tax cuts, he said.
According to János Veres, Financial Minister three reforms are necessary in the near future: the local governments, the social and tax systems need to be reorganized.
To decrease the central interest rate could mean that foreign investors will be taking out their money from the country, said Mihály Kupa, former Financial Minister. “If they want Hungary to tumble they should decrease the central interest rate,” he added. According to Kupa Hungary’s financial situation remains fragile as the foreign currency loan market can still fall in; people continue taking up high interest rate loans, municipalities have large debts and can go bankrupt easily. Kupa emphasized the necessity to reform public administration and the financing of the local governments.
The number of skilled laborers in Hungary is too small, there are not enough people in the production of goods, said Sándor Demján, chairman of VOSz. Proportion is important and the reforms have to resettle this. Either more than 1 million workers will be redirected to production or Hungary has to receive the same number of migrant workers, he added.

The BpSun Staff

12.12.2008