Hungary’s economy minister: Competitiveness key challenge for upcoming years

Budapest, November 3 (MTI) – Improving competitiveness, cutting red tape and taxes and easing the labour shortage will be the key challenges facing Hungary in the upcoming years, Economy Minister Mihály Varga said at an annual hearing of parliament’s budget committee on Thursday.

While Hungary is competitive in terms of exports and the number of working hours, a Hungarian worker produces half as much as a Dutch worker during the same number of hours. Hungary must also improve its ability to attract capital, he said.

Varga said state debt will continue to decline this year and the budget deficit will be below the 2 percent of gross domestic product (GDP) earlier expected. Economic growth is seen at 2.5-3 percent in 2016, he added.

Investors see an improved economic climate and a positive outlook, he said, citing growth and macroeconomic data submitted to parliament in the Final Accounts bill.

Real wages were up by 7.5 percent in January-August this year, Varga said, adding that another rating agency is expected to return Hungary into investment category soon.

Attila Mesterházy (Socialist), the head of the committee, said lack of competitiveness, nontransparent ownership and corruption were “serious problems” in Hungary. He noted that the labour shortage could start a negative spiral in the country’s economy.

Enikő Hegedűs of the Jobbik party, insisted that the government would “routinely” submit bills to benefit certain business people. For example, she said that proposed tax benefits on renovating historic monuments could help Saudi billionaire Ghaith Pharaon save money on the renovation of the chateau he bought in Hungary, while an amendment to the casino act would benefit Andrew Vajna’s businesses. In his response, the minister dismissed charges of “custom-made legislation” and insisted that both amendments would “serve socially beneficial goals”.

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Erzsébet Schmuck of the LMP party asked Varga about Hungary’s future sources of GDP growth once European Union funding grows thin and international companies may pull out due to growing wages. Varga said the Hungarian economy was strong enough to cope even without EU funds. “Competitiveness hinges on an entrepreneurial spirit and innovation rather than on injected funds”, he said, but admitted that “some companies have been comfortable on cheap community funding”.

Photo: MTI

Source: MTI