Hungarian central bank governor says PM Orbán derailed Hungary’s economy

Hungarian central bank (MNB) governor György Matolcsy has a personal problem, not a professional one, Balázs Orbán, the prime minister’s political director, told news site Mandiner on Thursday.

Mr Orbán was commenting regarding Mr Matolcsy calling for a complete turnaround in Hungary’s economic policy at the 62nd Itinerant Conference of Economists on Thursday.

Matolcsy said there was no economic policy direction in Hungary between 2021 and 2024, which may jeopardize the achievements of the 2010s and the goals set for 2030. He added that the Orbán cabinet made two big mistakes concerning the economy. First, they failed to keep the budget deficit at bay. Second, they did not join the central bank in their fight against skyrocketing inflation.

Governor of Hungarian central bank György Matolcsy. Photo: MTI

As a result, most people are victims of inflationary shock in the Hungarian economy, so they do not want to consume. He said the Orbán cabinet was wrong to believe higher real wages automatically boost consumption. He also highlighted that such a high deficit would be life-threatening for the Hungarian economy.

Central bank governor in unresolvable dispute

Mr Orbán noted that the central bank governor has a long-standing personal dispute with the minister responsible for Hungarian economic management, and according to Mr Orbán, this seems unresolvable.

He said that while the disagreement weighs on the economy, it will ceases at the latest on March 3 next year when the current mandate of Mr Matolcsy expires.

Photo: FB/Balázs Orbán

The government is not giving up its goal of making Hungary one of the five most liveable countries in Europe by 2030, he added.

Government launches EUR 152 million investment programme

The National Capital Holding (NTH), established to create a harmonised framework for state-backed capital financing of local companies, said on Thursday it is launching a HUF 60bn programme to promote Hungarian-owned companies making foreign direct investments, acquisitions and establishing companies abroad.

NTH is setting up the private equity fund for FDI abroad by allocating it USD 165m. The fund will be managed by Focus Ventures, owned by NTH. The fund contributes with equity financing to improving Hungary’s profit balance and increasing the international competitiveness of Hungarian companies.

Bence Gerlaki, a deputy state secretary at the National Economy Ministry, said in order to further increase economic growth and competitiveness, it is essential that the widest possible range of Hungarian companies be able to invest their capital on an international level as well.

From a geographical point of view, the fund primarily plans to invest in Europe, with the focus on Western and Central-Eastern Europe, and in Asia, particularly in the Central Asian region. The fund is generalist with regard to targeted sectors.

Individual investments by the fund will range from USD 1m to USD 25m. Companies will have to provide at least 30pc of the funds for a transaction from their own resources. The fund will apply risk sharing and expect an industry minimum return from investments.

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