Will the Hungarian government give in to Brussels to save the forint?
The Hungarian government is becoming more accommodating to Brussels’ demands. What is the point of this capitulation? Has the government also realised that the forint cannot be allowed to depreciate indefinitely?
The government is more lenient
When asked by 444.hu what the Hungarian government seems to be more lenient on, a Brussels-based expert replied that it seems to be more lenient on everything. This expert has a good insight into the negotiations between the European Commission and the Hungarian government on the reconstruction fund (RRF).
As 444.hu puts it, there is a lot of money at stake, and very little time left to get it. EUR 5.8 billion of aid is pending and a further EUR 9.6 billion in soft loans. 70 percent of the aid will be lost if the European Council does not approve the Hungarian government’s plan to spend the money by the end of the year.
The Council will have four weeks to approve the Hungarian plan if the Commission approves it first. This means that in any case, the Commission must approve the plan, which Hungary has not yet even submitted, by November at the latest.
The funds would be very important
This money would be very important to the government, especially as it has already spent some of it in advance. For example, it was going to pay for this year’s pay rise for doctors, but it has also started to finance some investments and grants that can be won through tenders.
But just as importantly, Hungary is the only EU member state that would apply for the reconstruction fund, but does not yet have an approved plan – this also contributes to the weakening of the forint. This makes investors see Hungary as riskier than other European countries.
“The government wants to do everything it can to make peace with Brussels over EU funds,” György Jaksity, founder of Concorde Securities, told Forbes.hu. He said that the forint is moving towards the category of play money, but at least the government does not want to kick us out of the EU for the time being. The country would be incapable of adopting the euro and the world would be incapable of sending Russia packing.
Read alsoUS terminates double taxation avoidance agreement with Hungary!
Source: 444.hu, Forbes.hu
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8 Comments
So – “giving in to Brussels” is our Politicians communicating to the EU our national plans of investments and reforms, with clear milestones and criteria, as recommended and adopted in 2019 / 2020?
https://ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_en
“To benefit from the support of the Recovery and Resilience Facility, Member States submit their recovery and resilience plans to the European Commission. Each plan sets out the reforms and investments to be implemented by end-2026 and Member States can receive financing up to a previously agreed allocation.
Each plan should effectively address challenges identified in the European Semester, particularly the country-specific recommendations of 2019 and 2020 adopted by the Council. It should also advance the green and digital transitions and make Member States’ economies and societies more resilient.
The Recovery and Resilience Facility is performance based. Fulfilment of agreed milestones and targets towards achieving the reforms and investments in the plans will unlock regular payments”
At least it appears as if it is submitted:
https://www.palyazat.gov.hu/helyreallitasi-es-ellenallokepessegi-eszkoz-rrf#
Nothing will save the Forint when the economy of the country is falling apart.
Hungary – under Prime Minister – Victor Orban ensured – by ATTITUDE alone to-wards the European Union – ensured that the “Die” was Cast – over the past decade.
This somewhat last ditch at SAVING – the Economy of Hungary – the cataclysmic collapse – the ramifications broadsheet already being witnessed – in Hungary – inflation, Interest Rate Increases – just to name (2) two factors of the Economy – that are under MASSIVE pressure – nothing is going to STABLIZE the Forint.
We must watch deepening widespread use of PROPAGANDA – by this Government.
Hungary – we are in an Economic & Financial – SHAMBLES.
“He who thinks he knows BEST” – and his party – the growing factual blame – just becomes clearer daily, and what we are going to be left with – who knows, but it will be UGLY.
Hungary has purchased a large amount of gold. If used properly, it can save the currency. There is low unemployment, huge investments are being made in Hungary. The tourism dollars are once more flowing into to the coffers. The answer could be in “made in Hungary products and less imports of foods and manufactured products”. Hungary should be able to save its currency if it wants to and not rely on Brussels or the EU.
One interesting note, Hungary did not agree to 15% corporate tax. Is the whole world is terrifies that a small country with relatively small population will entice all companies, there by ruining the economies of countries like the US or Germany?
No monetary gain can substitutes for loss of sovereignty.
Forint…. Ha, ha… Nothing will save the country when it’s leaders are corrupt kleptocrats.
@Janos: 😀 Thank you for making me 😀
I feel that you are saying what most Hungarians already know, or suspect (where there is smoke, there is fire).
And, at the last elections the Hungarian voters were wary of the “unknown” (the opposition coalition), and/or fooled by the pro-Orban media focus (ridicule, baseless negative innuendos and, in some cases outright lies) against the opposition coalition, and in that sense, the elections were not held on an even footing, far from it. 🙁
Even if Hungary does get that RRF, most of it, if not all, will be “diverted” (pilfered). 🙁
Ps. One can just imagine how much good could de done with that €5.8 b. and €9.6 b., and I’m not thinking of how many more new sports/football stadia could be built!