Budapest, June 4 (MTI) – The reputation of Hungary’s government in European Union circles is “constantly growing”, Economy Minister Mihaly Varga said on Thursday, after talks with a vice president of the European Commission.
At a press conference held jointly with Valdis Dombrovskis, commissioner for the euro and social dialogue, Varga said that although there were disputes ongoing between Hungary and the EU, these issues mostly concerned expectations regarding Hungarian economic growth. While the government sees it as 3.1 percent, the commission expects 2.8 percent of GDP this year, he added.
The OECD recently bumped up its growth forecast for this year to 3 percent.
The commission’s recommendations to Hungary are improving from year to year, which means the Hungarian government is more and more credible in the eyes of Brussels, Varga insisted.
“We are far from the days of the Socialist governments when Brussels had to issue warnings to Hungary because it had given wrong [budget] numbers,” he said.
Concerning the commission’s latest recommendations to Hungary, which were on the agenda of talks between Varga and Dombrovskis, the Hungarian minister said that disputed issues included Hungary’s fostered work schemes. He said that those programmes were a success story, with 13 percent of the participants finding jobs on the labour market. “Rather than benefits, we want to ensure jobs for all,” he said.
Another dispute between the government and Brussels is Hungary’s flat tax system, which Hungary will not change as it has “met the expectations” of boosting the economy and employment, Varga said.
Dombrovskis said the Hungarian economy is growing well, and noted that Hungary’s 3.6 percent growth rate in 2014 had been the second biggest in the EU. He added, however, that the Hungarian government disagreed with the commission’s position that Hungary will need fiscal adjustments of 0.5 percent of GDP this year, and 0.6 percent in 2016.
Concerning Hungary’s banking sector, Dombrovskis said that its operations were hindered by the special tax levied on banks and a high rate of bad debts. He noted the Hungarian government’s commitment to sell its stakes in commercial banks, and said that the commission was encouraging Hungary to do so.
Economic players in Europe have emerged from the crisis and by now should no longer reflect on the past but look to the future, Varga said later at an event in Budapest. Speaking at a meeting of the European parliamentary group of the European People’s Party, Varga outlined the situation of the Hungarian economy and the path it took out of the crisis.
Hungary’s economic position since May 2010 has fundamentally changed, he said. Besides talking about fiscal discipline and the external balance, today the discourse is about how the country, in certain quarters, became the third strongest growth performer among the 28 EU member states and even came top of the class.
Over the past five years there were three discernable periods. From summer 2010 to autumn 2011 was a period of consolidation. The second phase between autumn 2011 and the start of 2013 saw domestic economic policy playing an independent role in world economic events, temporarily sticking to favorable trends. In the third, in the second quarter of 2013, the country’s economy again rejoined the growth path and in 2013 the European Commission recognised the government’s efforts towards fiscal discipline and lifted the 9-year excessive deficit procedure.
He said that Hungary had proved that a model whereby the process of restructuring does not run contrary to social stability can work.