Hungarian official slams multinationals, EU infringements

Gyorgy Matolczy.jpg

Hungary's Economy Minister György Matolcsy accused banks and multinationals of attacking his government with "all possible means", a day before he is widely expected to be named the new central bank governor.

In an article in weekly Heti Valasz, Matolcsy said Hungary was able to cut its budget deficit using a special "Hungarian model", avoiding the austerity demanded from other countries.

Matolcsy said the tools used by Budapest, including a bank tax, taxes on energy firms, a telecoms tax, reform of the private pension system and a tax on financial transactions, had met the resistance of strong interest groups.

"Among these the big EU business groups – banks and multinational firms – keep the government under pressure with all possible means," he added.

"This is behind the attacks in the media, the EU infringement proceedings, the [ratings] downgrades, the financial market speculation and the political attacks."

Prime Minister Viktor Orbán is expected to name his candidate for central bank chief on Friday and Matolcsy, whom Orbán has dubbed as "his right hand," is widely seen to be nominated for the job.

Matolcsy said the Hungarian government's economic policy posed a direct challenge to the European Union's institutions and to governments caught up in the trap of traditional policies.

"By today we have proved that we are able to finance state debt without an IMF/EU loan because we have carried out a successful fiscal consolidation," Matolcsy said.

"Only few countries are able to do this in Europe, the southern states of the eurozone would sink without bailouts and the help of the European Central Bank."

Faced with a mounting debt problem, the centre-right ruling party Fidesz has pledged to cut the country's budget deficit below 3% of GDP in 2011, making it appear as a top performer in the EU.

But the methods used to achieve this goal have stirred controversy inside the country and now also at European level.

To get the budget within EU limits in 2011, the government is relying on unorthodox, one-off revenues, making markets fearful the fiscal gap will bulge again after 2012 unless more durable measures are introduced.

Bank taxes, "special taxes", "temporary taxes", nationalisation of private pension funds and levies on foreign businesses are all seen with growing scepticism by both public opinion and financial markets.

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