euro

Forint at an all-time low as the country struggles with crisis

Kató alpár daily news hungary forint dollars hungary

As emerging-market policymakers scramble to contain the economic fallout from the global pandemic, Hungary’s central bank is giving currency traders mixed signals. On the one hand, it has announced significant liquidity easing, while on the other hand, they are curbing cash available via some tools at weekly tenders, reports Bloomberg.

Policymakers have offered to pump up to 9.6 trillion forints ($29 billion) in liquidity into the economy via weekly repo tenders of as much as five years in maturity, part of their efforts to prop up banks and firms. But the volume of cash injected into the economy for a shorter term through foreign-currency swaps has fallen.

“The National Bank of Hungary is unlikely to welcome the current dynamics of forint weakening despite the economic deceleration and will likely target a gradual depreciation path,” analysts including Eszter Gargyan said in a note.

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Read alsoForint strengthens from historic low after central bank tender announcement

Hungary’s forint fell to a record low against the euro on Tuesday, tracking declines across Eastern Europe, even as the central bank sought to balance the impact of stimulus on the currency. The forint slipped 0.2% to 359.8 per euro, passing the previous record reached in March.

While the currency’s 5.9% decline this month is in line with moves for the Czech koruna and the Polish zloty, the National Bank of Hungary’s more dovish monetary policy in recent years meant that it was already weak before the coronavirus sparked a flight from riskier assets.

This will lead to the flattening of the yield curve, according to Citigroup Inc. analysts, who recommend buying 5-year Hungarian government bonds, hedging for currency swings.

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Read alsoHungarian net wages grow in January, still under 700 euros

Forint strengthens from historic low after central bank tender announcement

forint

The forint started strengthening after a historic low on Wednesday following the central bank’s announcement of a tender for one-week deposits.

The forint stood at 364.64 against the euro at 3.30pm after a historic low of 369.63 before 3pm. On the first day of trading this year, the forint was at 331.11 against the euro.

The National Bank of Hungary (NBH) announced the launch of a tender for one-week deposits that pay the 0.90 percent central bank base rate.

The tender can “contribute to improving the efficiency of banking sector liquidity management and support a reduction in the stock of O/N deposits”, the NBH said.

“The liquidity trends of the past weeks and the uneven distribution of liquidity between banks justifies the introduction of a liquidity sterilisation instrument,” it added.

The first tender for the one-week deposit will take place on Thursday, April 2.

The tender parameters will be announced at noon.

NBH rate-setters decided at a monthly policy meeting late in March to undertake a series of coordinated measures “to provide the required level of liquidity for all economic agents”.

The central bank’s Monetary Council said they were ready to take further measures to provide additional liquidity to preserve effective monetary policy transmission.

Triest and the future of a post-Brexit EU

Daily News Hungary

The year 2020 and the Brexit will increasingly focus public attention on the need for certain long overdue and inevitable EU reforms that are vital for the survival of the European Union.

After the UK’s exit, the German-French “steamroller” will be (hopefully at least) in full swing and take a tighter grip on the EU’s rein. This could comprise several different concepts and measures, such as the “two-speed” Europe, the Eurozone and disciplining recalcitrant member states. In the long run, staying out of the Eurozone will mean being left out of the European Union as well. However, even the survival of the Euro has its own special conditions.  At this point, let me refer to the “Father of the Euro” Alexander Lámfalussy, who soon pointed out that if the monetary union was not coupled with a fiscal union (i.e., a harmonized EU financial policy), the ECB monetary political tools would be insufficient to handle the repeated crises and the EU would be destined to a permanent crisis, which would prevent any persistent currency. However, such harmonization requires reforms that some “illiberal-leaning” EU members will have difficulty accepting since having their “own currency” is a key instrument for sustaining their clientèle and, ultimately, their power.

Many analysts are convinced that the real token of the EU’s survival lies in a shift from the intergovernmental union towards a federal European model, which is most probably true for certain areas, such as foreign and defence policy, financial policy, development policy, environmental policy and the labour market.

Interestingly enough, the hero of the 1848-49 Hungarian freedom fight and war of independence, Lajos Kossuth already conceived of the concept of a European confederation by the second half of the 19th century, being the first to raise the European confederation “of the nations living along-the-Danube” . By doing so, he largely acknowledged the truth of his intellectual opponent Count Széchenyi (the great patriotic aristocrat, who established the Hungarian Academy of Science which is being destroyed by the illiberal Orbán regime at this very moment).

Beside the inevitable EU reforms, the Union’s geopolitical structure must also be reconsidered: the Brexit will cause an even more intensive weight concentration along the Franco-German axis (Strasbourg-Brussels-Luxembourg-Frankfurt). Being unsustainable in the long run, it will most certainly cause problems and decelerate the integration of the member states situated on the periphery. It will serve as a hotbed for “anti-Brussels” sentiments as well as “anti-Brussels” rhetoric and instigation.

Hungary’s example shows how realistic this scenario is: one of the key themes of the 2018 elections (won by the incumbent by a two-thirds majority) was how to “suppress Brussels’ power” and “fend off Brussels’ attacks”.

Orbán’s party flooded the country with such outdoor media posters where Brussels and EU leaders were depicted as the enemy.  Orbán, who has become Putin’s, Erdogan’s and China’s quartermaster, might sound like an extreme example but the danger is real: always being more exposed to crises by default, peripheral countries may very easily develop an extremely anti-Brussels sentiment which demagogue politicians will be more than ready to further incite for their own benefit.

Another question is how long the EU and, more specifically, such a key representative of European values as the European People’s Party, is willing to tolerate among its ranks Orbán’s Fidesz which has become an extreme organization as well as an active destroyer of the said European values and unity? 

The necessary EU reforms will definitely take these factors intoaccount, and these reforms must also be viewed from the aspect of the EU’s peripheral member states. That’s what is proposed by an excellent study published by the Vienna Institute of International Economic Studies (Wiener Institut für Internationale Wirtschaftsvergleiche WIIW) in November 2019, which states that the EU’s Central and Eastern European region is unsustainably underdeveloped and will lag behind even more. So the researchers recommend implementing such infrastructural development projects that could connect Central and Eastern Europe’s underdeveloped  regions into the European bloodstream in a sustainable manner. These projects could more efficiently link the underdeveloped regions to Western Europe’s most advanced areas, thus promoting the development of the underprivileged belt and preventing the westward migration of the highly-skilled and young labour force, which is already taking alarming dimensions. 

This idea is further supported by the voices urging for setting up a South Eastern European centre for the EU in addition to the existing North Western hubs.

Instead of just hosting a few EU institutions, this new centre could be a real “second Brussels” with the seats of major EU institutions, thus replacing Strasbourg, for example. According to several analysts, the most likely candidate would be the Triest-Rijeka region which offers all the features that Brussels has and even far more. Lying on the border of South, Central and Eastern Europe, it is a multinational seaside location with a great historical heritage that connects the Germanic, the Slavic and the Latin cultures and has been functioning as a key junction of land and marine trading routes for millennia. It could become a genuine connective link for the EU, not only to the Balkans and the Mediterranean but to Northern Africa and the Middle East as well, which may have significant implications for the future. The establishment of such a new and truly important EU capital would be far more than just a gesture to the EU’s peripheral member states or partners and neighbours wishing to join the Union ; it could also promote the EU’s long-term sustainability and survival. 

Guest author: Dr István Teplán President, Prosum Foundation

Central bank governor Matolcsy calls for euro zone reform at Lámfalussy Lectures

lámfalussy-conferencs-matolcsy

Central bank governor György Matolcsy called for the reform of the euro zone and a “rethink” of the Maastricht criteria in a presentation delivered at the bank’s annual Lámfalussy Lectures conference on Monday.

The event this year focuses on sustainable convergence, Matolcsy said. He called on members of the European community to start a dialogue on reforming the euro zone and added that Hungary had already prepared its programme.

Hungary has been on a path of sustainable convergence since 2013, with economic growth at an average 3.8 percent, 2 percentage points above the euro zone average, he said. GDP per capita is at 73 percent of the European Union average and public debt is expected to drop below 60 percent of GDP by 2022, he added.

Next to the positive changes, Hungary needs new reforms in competitiveness which also requires a dialogue with international partners, he said.

Twenty years after the introduction of the euro, some basic conditions have still not been fulfilled, and a new dialogue is needed on ways to reform the euro zone, Matolcsy said. The thirtieth anniversary of the Maastricht Treaty in 2022 will provide an excellent opportunity for reform, he added.

The first ten years of the euro zone were successful but since the global financial crisis, numerous problems and unresolved issues have developed, he said.

At a preceding event of the conference on Sunday, the National Bank of Hungary awarded Peter Praet, former Chief Economist of the European Central Bank with the Lamfalussy Prize.

The Sándor Lámfalussy Prize recognises “outstanding financial and economic professionals who performed internationally acclaimed professional work, scientific publications or educational work that have a major long-term impact on the development of the Hungarian and international monetary policy, economics and the professional community”.

Governor of Hungary’s central bank: Introducing the euro was a mistake!

matolcsy

It is time to admit that introducing the euro was a mistake as almost none of the preconditions for a common currency were met at the time, György Matolcsy, the governor of Hungary’s central bank, said in an article published in the Financial Times on Sunday.

Matolcsy noted that “two decades after the euro’s launch, most of the necessary pillars of a successful global currency – a common state, a budget covering at least 15-20 per cent of the eurozone’s total gross domestic product, a eurozone finance minister and a ministry to go with the post – are still missing.”

He called the introduction of the common currency “a French snare” designed by former French President Francois Mitterrand “who feared growing German power and believed convincing the country to give up its Deutschemark would be enough to avoid a German Europe”.

The euro, however, “was un­able to prevent the emergence of another strong German power”, Matolcsy said.

Germany, on the other hand, has grown “complacent”, Matolcsy said.

“They missed the digital revolution, miscalculated the emergence of China and failed to build pan-European global companies,” he added. Matolcsy cited an analysis by the Centre for European Policy, saying “there have been few winners and many losers in the first two decades of the euro”. “Most eurozone countries fared better before the euro than they did with it,” he said.

“We need to work out how to free ourselves from this trap,” Matolcsy said.

Democratic Coalition

Meanwhile, the leftist Democratic Coalition (DK) slammed the article and called on Prime Minister Viktor Orban to immediately initiate talks on introducing the common currency in Hungary. Zsolt Gréczy, DK’s parliamentary group spokesman, told a press conference that by writing the article, Matolcsy had proven himself “unfit to occupy any economic office”.

Introducing the euro is in Hungary’s national interest, Gréczy said, adding that “anything that goes against this is an open betrayal of Hungary’s national interest”. Only by introducing the euro can Hungary prevent the further depreciation of wages and pensions, he said.

Opposition DK calls for EU to press Hungary to adopt euro

wage money Euro

The opposition Democratic Coalition (DK) will propose in the European Parliament that the European Union should legally compel Hungary to introduce the euro, DK MEP Csaba Molnár told a press conference on Thursday.

The euro is expected to reach “historic highs” against the forint within days, impacting the prices of fuel, food and drugs, Molnár warned.

Hungary pledged to introduce the common currency during its accession negotiations (before joining the bloc in 2004), Molnár said. Adopting the euro “immediately” would boost the Hungarian economy, and has the support of the majority of citizens, he said.

Commenting on the press conference, ruling Fidesz said in a statement “Gyurcsány and company want to put Hungary at Brussels’ mercy”.

While in power, Gyurcsány’s government gave up Hungary’s financial sovereignty and “ruined and nearly bankrupted the country”, the statement said. Under Fidesz, Hungary is growing stronger financially and has become one of the most dynamically growing economies of the EU with permanently low deficit and inflation, they said.

Eurobarometer: Two-thirds of Hungarians would welcome euro

corruption money euro

The majority of people in countries outside the euro zone would welcome the introduction of the European currency, according to the latest Eurobarometer survey published in Brussels on Friday.

The report said that voter support for the common currency was 66 percent in Hungary, the highest in the group of seven countries.

On average, 55 percent of the group’s population would support an immediate while 42 percent an early introduction of the euro, the report said.

Fully 56 percent of respondents in the seven countries said that the common currency has a good impact on the economies which have already joined the currency union. In Hungary, 70 percent of participants had the same opinion.

The survey was conducted in Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania and Sweden.

Watch out! number of fake euro notes increasing

corruption money euro

Last year, over one million fake euro notes were found, half of which were simple photocopies, only with Chinese holograms. This means a 30%-increase in Europe, according to German law enforcement agencies.

In Germany, 99 912 fake bank notes were found last year, according to the Federal Criminal Police Office of Germany (BKA). This means a 1%-increase for the country, while the value of these fake banknotes amounts to a total of 17 million euros, which is actually almost 2.5 times as much as the sum from the year before, reports Privátbankár. However, the number of suspects and the initiated proceedings show a slight decline (3469).

When it comes to Europe as a whole, a 30%-increase in the number of fake banknotes can be observed, with the number rising to 1.17 million.

In total, the fake banknotes found are worth 102 million euros, meaning an 82%-increase in value.

It is important to note that the “darknet”, the secretive, anonym corner of the internet plays a significant role in the increase of fake banknotes.

Perpetrators and photocopies

Sadly, it seems like the perpetrators are getting younger, too, with the number of participants under 21 growing. There are both internationally operating organised forger groups and private individuals making use of the opportunities provided by the darknet. Last year, three major forger groups were exposed, one of them with mainly Turkish participants, the other with mostly Italian and the third with mostly German members.

About 40% of the fake notes were made by simple photocopying, with Chinese holograms added as the finishing touch.

The most often forged note using this method is the 50-euro banknote.

These then are propagated on the darknet, and delivery services make sure they get to those who ordered them.

Even though forging euro coins also occurs, the focus was on the banknotes this time due to their higher value. Misappropriating online currency was also left out of the German Federal Criminal Police Office’s report.

What to do

Luckily, there are ways that help you recognise fake banknotes. It is better to check multiple security elements instead of just one. You should memorise these and go through the list, in the process of which folding the note and feeling the texture can be helpful. Comparing the suspicious note to one that is real can also be a smart way of identifying fake euros. Otherwise, you can always turn to a bank to ask for help.

To learn about the most popular Google searches of 2018 in Hungary, click HERE.

Survey: half of Hungarians are against adopting Euro

forint euro kató alpár fotó

Results of a representative survey show how Hungarians feel about the possible introduction of the official currency of the majority of the EU: the Euro. As it turns out, half of the respondents found it unnecessary.

Results of a representative survey conducted by Závech Research show that only 38% of Hungarians support the introduction of Euro, 24.hu reports.

Almost half of the respondents (49%) think that Hungary does not need to adopt the official currency of the European Union,

while 13% of respondents could not or did not want to answer the question.

Currently, 19 of the 28 member states use the Euro.

Ten countries joined the European Union in 2004, including Hungary. Seven out of these countries (Slovenia, Slovakia, Latvia, Lithuania, Estonia, Cyprus, and Malta) already adopted the Euro currency. Slovenia was the fastest, which introduced the Euro in 2007. Thus, the remaining states who joined the union in 2004 (Hungary, Poland, the Check Republic) have not adopted the currency yet, together with countries who joined the EU later (like Romania, Bulgaria and Croatia).

The Hungarian government is not very keen on adopting the Euro.

The government’s standpoint is that it is impossible to see the Euro’s future because the Euro-zone is constantly altered, and its rules are always changing.

Every state which joins the European Union is required to adopt the Euro. However, the period in which this adoption has to happen is not specified. Thus, it depends on the countries when they decide to introduce the common currency.

The tendency in Hungary is that the government is against the use of the Euro while the opposition supports it. Thus, the majority of Fidesz supporters (57%) is against the adoption of the Euro, and only one-third of them (31%) supports it. As opposed to the opposition, where every second respondent support the idea, and only 33% are against it.

More people support the use of Euro among people who attended higher education (48% for and 42% against) and who live in the capital (46% for, 39% against).

Regarding the different age groups, those against the Euro are in the majority, except for the younger sample (age 18-29) where the results show a draw.

The Hungarian Forint will continue to be weak

Hungarian forint

In the last few months, there was a period when the Forint strengthened, and it was hoped that it would return to its valuation prior to last summer’s collapse. There are too many variables at play preventing the Hungarian currency strengthening; however, according to privatbankar.hu, further devaluation cannot occur either.

Despite it being a floating currency, the Forint’s value does not change much. The dollar’s value often rises and falls 10% compared to the Euro or Yen within a year or a few months, while the Hungarian currency does not usually move beyond its narrow range of 5%. However, last year’s collapse saw the Forint outside of this bracket.

Poor wages

Due to the Forint’s low value, Hungarian household incomes are still lagging behind Western European ones, despite a 10% rise in wages. Hungary’s net-average salary is under €800, which is a 1/3 of wages in Germany, Austria, France and the UK. All the while, Hungarian purchasing power parity (PPP) is above the countries mentioned.

There is a big difference between PPP and nominal value, meaning that the Hungarian currency is both weak and undervalued. In addition, Hungary has a balance of payments surplus, which would enable Hungary’s rise in wages if measured in Euros. Economists were hopeful that this process would start; however, it seems very unlikely at the moment.

Till 2013, 1€ could be purchased for under 300 FT. In subsequent years, the Euro’s value crept up to between 305 and 315 FT. This devaluation could be linked to the exchanging of foreign debts in the last few years.

Foreign debt

This process has been going on since foreign national debt has fallen from 50% to 20%, while securities in Swiss Francs had to be exchanged to other foreign currencies. After overcoming all these foreign exchange pressures and having a balance of payments surplus, it was predicted the Forint would strengthen and thus reduce prices.

However, based on the most recent communications, the Hungarian government wants to exchange the remaining 20% of foreign debt into the Hungarian currency. In this programme, the government hopes to sell more bonds, which would lead to a rise in their interest rates. Loose financial regulation will help to facilitate this. These events will make it impossible for the Forint to increase in value.

High inflation

In addition to all this, inflation has been on the rise. Increasing wages have led to increased consumption of both foreign and domestic products, despite a proportion of the latter being destined for export. A rise in domestic trade will not support the Hungarian currency strengthening in relation to the Dollar and the Euro.

Public trust

The Forint’s undervaluation will decrease if the inflation rate becomes greater in Hungary than in the Eurozone. This could lead to further devaluation of the Hungarian currency; however, it is not in the government’s interest as they wish to trade public funds on the securities market. This means that a situation where trust in the Forint decreases and public saving is exchanged into Euros will not arise.

It appears that the Forint will stabilise at 320 FT and deviate around that value. The strengthening at the beginning of the year could be linked to monetary speculation related to the government’s monetary policy. The subsequent rise in interest rates has led to the currency’s devaluation to its current level.

Last week, we reported that Socialists Párbeszéd want to introduce the Euro to Hungary in order to make the country less vulnerable to economic shocks. A government official has also called the Hungarian economy a ‘success story’.

EP elections – Socialist-Párbeszéd urges euro introduction in Hungary

businessman euro money

The opposition Socialist and allied Párbeszéd parties have called for introducing the euro as soon as possible in Hungary.

Introducing the euro would make it clear that Hungary “wants to belong to the core of Europe rather than to its periphery”, a lawmaker of Párbeszéd told a press conference on Thursday.

Bence Tordai noted Prime Minister Viktor Orbán’s cautioning earlier of the possibility of a new economic crisis which Tordai said could seriously hit Hungary’s small and vulnerable economy.

He said the two parties propose as a safeguard for Hungary to join ERM II, commonly referred to as the ante-chamber to the euro zone, in 2020.

Balázs Bárány, member of the Socialists’ national board, said introducing the euro would guarantee Hungary a stable position in the European community in the long term.

The two parties have called a competition for a Hungarian design of the currency with an April 26 deadline set for submitting bids, he said.

The designs will be put on display for a public vote on May 1, Bárány said.

Hungary’s economic achievements recognised even by former critics, says Minister Varga

Varga economy minister

Hungary’s economic achievements have been recognised even by those that used to be the harshest critics, the finance minister said in parliament on Monday commenting on the country’s recent credit ratings.

Fitch Ratings raised Hungary’s Long-Term Foreign- and Local-Currency Issuer Default Ratings to ‘BBB’ from ‘BBB-‘ at a scheduled review last Friday, a week after Standard and Poor’s improved its rating of Hungarian long- and short-term government debt to ‘BBB / A-2’.

The trends projected by the ratings agencies coincide with the government’s expectations, Mihály Varga said.

He also noted Statistical Office figures showing that Hungary’s economy expanded by 5 percent in the last quarter of 2018 while euro zone and Germany expansion slowed down. Hungary is among the leaders both in European and regional terms, he added.

Last year’s 4.8 percent growth resulted from an economic path that pushes growth in every sector, unlike during the Socialist-led governments of the past that achieved growth through privatisation, Varga said.

Public debt has been reduced from 83 percent of GDP to under 71 percent while the number of workers increased to 4.5 million from 3.8 million in 2010, Varga said. Hungary’s unemployment rate at 3.6 percent is among the four best in the EU, he added.

Gross wages grew by over 11 percent last year and inflation stayed under 3 percent, which means that the good economic performance can also be felt by the public, Varga said.

Among the tasks, the minister mentioned increasing competitiveness, expanding employment, reducing the public debt and strengthening families.

HUNGARY OPPOSES SEPARATE EURO ZONE BUDGET, SAYS FINANCE MINISTER

Hungary does not support the proposal to create a separate euro zone budget, as such a concept would be against the country’s interests, Finance Minister Mihály Varga said, read more HERE.

Romania sets date for introducing the Euro – earlier than Hungary!

Romania voted on a target date of when they would start using the Euro. The committee was in favour of the 2024-2026 target date with an overwhelming majority.

Previously, there were hopes the shift could take place by 2022; however, this current date seems more realistic – reports HVG. According to Prime Minister Viorica Dancila’s report from last spring, Romania has regarded the introduction of the Euro as a primary task ever since they joined the EU back in 2007. Before the economic crisis in 2008, the target date was set to be 2019; however, the uncertainty caused politicians to postpone the issue for an undefined period of time.

During the meeting, the parliamentary body discussed the documents necessary for preparing for the shift to the official currency of the European Union. They consulted the parties of the parliament, Mugur Isarescu, the Governor of the National Bank of Romania, the board of the Romanian Academy, presidential advisors, leaders of trade unions, representatives of the private sector as well as other organisations when making the decision.

In order to reach this goal, Romania has to achieve real convergence, increase their competitiveness, make economic growth sustainable, and join the European exchange rate mechanism (ERM II).

As for Hungary, the goal of introducing the Euro as the official currency used to be between 2018 and 2020. However, it quickly became apparent that that does not belong to the primary goals of the government and it could take years until the shift happens.

According to an article on Index from last year, Hungary has already met two of the five conditions for introducing the Euro, and the third one is also close to being met. However, PM Orbán says Hungarians still have to decide whether they want a deeper integration with the EU or want to keep economic and national policies their own.

The latest EU survey showed that 52% of Hungarians are for introducing the Euro while 41% are against it.

For more news, check out this article about the most popular Google searches of 2018.

Hungary opposes separate euro zone budget, says finance minister

euro money bond

Hungary does not support the proposal to create a separate euro zone budget, as such a concept would be against the country’s interests, Finance Minister Mihály Varga was quoted as saying at a meeting of EU finance ministers in Brussels on Monday.

Varga told his EU colleagues that having a separate budget for the countries that share the common currency could present serious risks, the finance ministry said in a statement.

A euro zone budget would unnecessarily deepen the existing divide between euro zone and non-euro zone members, the minister said.

Varga said all EU member states had a duty to develop their economies, help the less advanced countries catch up with the more prosperous ones and promote innovation and R+D. But the passage of a joint euro zone budget would restrict non-euro zone countries from financing the bloc’s common goals, he argued.

The idea for a euro zone budget was proposed by German Chancellor Angela Merkel and French President Emmanuel Macron in June after their meeting at Merkel’s Meseberg retreat outside Berlin.

The creation of such a budget requires the backing of the other 17 euro zone countries.

Several other countries, including the Netherlands and Finland have also expressed their opposition to the plan, the ministry said.

Orbán cabinet: EU’s rejection of Italy’s draft budget politically motivated

itly eu flag

Government spokesman Zoltán Kovács, in an interview to Thursday’s edition of conservative Italian daily Libero, said the European Union “passed political judgement” when it rejected the Italian government’s draft budget.

The Hungarian government rarely comments on EU decisions regarding other member states, but “it seems obvious” that the EU “expressed a political opinion” about Italy’s draft budget when it should have undertaken a strictly technical and procedural assessment, Kovács told the paper.

Libero conducted the interview with the government spokesman during his visit to Rome just as the European Commission announced that it was launching an excessive deficit procedure against Italy over the government’s draft budget.

Kovács said the EU’s rules should apply equally to every member state. He said that whenever Italy and Hungary break the rules, they get sanctioned, but when France or Germany do it, they get off scot-free.

The government spokesman said the bloc’s rules should be changed so that they can be complied with. He said Italy would be capable of drafting a budget without exceeding the EU’s deficit reference value.

Had Hungary joined the euro zone, it would not have been capable of accomplishing the economic feats that it has, he said. Hungary will adopt the common currency “when we are ready, when there are new rules and we get guarantees”, Kovács added.

Kovács said Brussels was also mulling a sanctions procedure against Hungary over its migration policy. “But this is another form of intervention that does not fall within the scope of the EU’s authority,” he said. Kovács said Hungary was right to implement the measures it has and expressed hope that the EU will decide against imposing sanctions on the country.

Stable eurozone in Hungary’s interest, says economy minister

euro

The balanced and stable operation of the eurozone continues to lie in Hungary’s interest, Finance Minister Mihály Varga said at an extended Eurogroup session in Vienna on Friday.

Hungary has since the very beginning supported efforts to accomplish the banking union, including the related safety net, the finance ministry cited Varga as saying in a statement.

The Eurogroup finance ministers discussed plans for the early introduction and the decision-making mechanism of a common safety net in the framework of the European Stability Mechanism (ESM), the minister said.

Expounding Hungary’s position, Varga said

the safety net would reinforce the eurozone‘s financial stability in the long term.

Hungary supports the technical consultations paving the way for the amendment of the related inter-governmental agreement.

Concerning decision making, the minister said that the euro-zone member states and the countries that are not members of the zone but join the banking union should be treated under equal terms.

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Hungarians must pay more for the same products than Germans!

shopping

According to index.hu Hungarians have to pay more for certain products than Germans. This is a painful discovery as Hungarians are usually upset to learn that something is cheaper in the “rich West” – especially if we consider the fact that in Germany the average salary is about twice of ours.

Recently we wrote about the shocking number of Hungarians predicted to leave the country. In contrast, a reader of Index is just planning to return from Germany, but had to discover the sad difference in prices.

The very same razor and shower gel, in the same drugstore chain, cost more in Hungary than in Germany.

How much is it really?

Index compared the price of certain products based on the German and Hungarian webpages of the drugstores DM and Rossmann. Similarly to the realisation that German history sometimes equals Hungarian reality, our country again got the worst of it: several products are indeed more expensive here.

Of course, we must keep in mind that there are several influencing factors. The products are more or less the same, but they often come in different packaging. For example, a bottle of shower gel and hairspray has more or less content here, razors sometimes come with three replaceable heads and sometimes with none. Not to mention that depending on the size of the packaging, the price differs within one market as well, and we should not forget about the different discounts and special offers either.

However difficult it is to make comparisons,

certain products are available in the same packaging, proving the assumption that we must pay more for those than the wealthier Germans.

Let us see a few examples:

  • A package of four razor replacement heads for men from a well-known brand costs 13.95 € in the German DM, which (counting with an exchange rate around 323 HUF) translates into 4515 Forints, while the same product here costs 7499 Forints
  • Similarly, in Rossmann, a different set of eight razor replacements heads from the same brand is priced at 99 €, that is 6793 Forints, while in the Hungarian stores it is 7999 Forints
  • The hair sprays of another well-known brand are available in Rossmann for 1.59 € (514 Forints) for the German customers, while Hungarians pay 999 Forints for it
  • Taking a look at shower gels, the same product in Hungary costs 729 Forints, while in the German DM it is only about 437 Forints (1.35 €).

Taxes and economies of scale are to blame

wage

 

– or at least these were to two main reasons according to the interviewed drugstores.

As far as taxing is concerned it is easily understandable: the VAT is much higher in Hungary. Here 27 percent of the price goes to the treasury in the case of most products, while in Germany it is only 19 percent. So even if the price of the products were the same without VAT, they would cost more in Hungary.

However, they do have different prices.

Why is that? We must consider that the population of Germany is more than eight times bigger, so eight times more people take showers, shave, spray their hair and so on. Therefore the German Rossmann, DM or Müller can purchase products for a larger market in larger quantities – and thus for less money. Although the drugstores and the companies manufacturing the products – such as Procter & Gamble or Henkel – are global multinationals, purchasing is not centralised, that is, the Hungarian Rossmann gets its products from the Hungarian or regional Procter & Gamble.

In addition, there are extra costs involved in the final price such as the cost of delivery, packaging, and labelling, plus the administration of the products and so on. Nonetheless, in the end, we still take a shower or shave for more here than people in Germany.

Socialists call for three-way talks on introduction of euro

corruption money euro

The Socialist Party on Wednesday called for employers, unions and parliamentary parties to sit down for talks on Hungary’s adoption of the euro.

Addressing a press conference, Socialist MEP István Újhelyi noted that national business association MGYOSZ earlier this week called on the government to start focusing on Hungary’s euro-zone accession.

He said the government had a duty to discuss the potential introduction of the single currency with members of society.

Hungary must not miss out on joining the euro zone, Újhelyi said, adding that the government should consider the opinions of unions and employers on the matter.

He noted that Slovakia and Slovenia were already euro-zone members and that Bulgaria has also applied to join.

Újhelyi said his party would propose a schedule for the trilateral talks in early September.