New euro introduction date set in Hungary? It is surprisingly close

We wrote earlier this week that Hungary might meet the Maastricht criteria for adopting the euro by the end of 2024. Furthermore, Hungarians support the idea of introducing the euro. Therefore, mfor.hu, a Hungarian business news outlet, lamented whether Hungary may use the euro from 2027.

Károly Csabai, the editor-in-chief of the Hungarian business news outlet, wrote that the head of the Fiscal Council, Árpád Kovács, who said on Thursday that Hungary might meet the Maastricht criteria for introducing the euro by 2024, is a professional, not a political delegate. He supports that claim with the fact: Mr Kovács received a leading position regardless of the government.

Under the Socialist Horn-cabinet, he became the head of the State Audit Office of Hungary and remained in that position until 2009 despite two government changes. In 2012, the second Orbán cabinet elected him chairman of the Fiscal Council. Thus, his thoughts are worth listening to and reading. He said this week about introducing the euro that the inflation in Hungary would fall below 3 percent by 2024 summer, while the state debt would be below 70 percent of the GDP. Furthermore, the state budget deficit will decrease to 2.9 percent by then. The Maastricht criteria contain four stability requirements: prices, state budget, interest rate and currency exchange rate.

Here is the possible date of euro introduction in Hungary

Kovács has been monitoring the state of the Hungarian economy from the perspective of introducing the euro for years. And if he says Hungary meets the criteria by next year-end, it means we may join the eurozone in 2027 since a 2-year-long transition period is required. Interestingly, many Hungarians already use the euro. Since the EU currency is used in 20 out of the 27 member states, Hungarians living in Slovakia, Croatia, and Slovenia already use it. That concerns hundreds of thousands of people.

However, Mr Csabai added in his article that the Orbán cabinet would not like to introduce the euro. The government regularly communicates that it is not a Hungarian interest. György Matolcsy, the head of Hungary’s national bank, said that under the current conditions, Hungary did not need the European currency. The Hungarian government believes they need forint for Hungary’s economic catch up.

Forint has been devaluing since 2010. That is good for the international competitiveness of the goods produced in Hungary. But swings in the forint’s exchange rate does harm business players, Mr Csabai highlighted. Furthermore, if the forint begins to fall, the national bank defends it with higher interest rates. But that generates inflation harming citizens. Neither the central bank nor the government would like to change their opinion about introducing the euro. That means until Orbán governs Hungary, the forint will remain despite its vulnerability.

• Read also: The Euro could come to Hungary in 2024