Prime Minister Viktor Orbán gave an interview to American business news agency Bloomberg at the weekend in which he spoke about the Government’s economic achievements and priorities.
According to Prime Minister Orbán, economic growth topping 3 percent and a budget deficit kept within European Union limits show that the Government’s policies, which the Prime Minister called the “Hungarian model”, are functioning well.
He mentioned economic expansion, decreasing unemployment and budget discipline as examples of good economic policies.
Hungary is seeking to regain its investment grade, is planning to lighten taxes levied on the banking sector in 2017 at the latest and may review further taxes next year, the Prime Minister mentioned.
“We are in talks with the banking industry on normalizing the level of the bank tax”, Mr. Orbán said, adding that “this may be possible around 2016 or 2017 if we can strike a good agreement, the chances of which are better than at any time since we came to power in 2010.”
He said a decision on the bank tax could be made after the country phases out foreign-currency mortgages and is dependent on lenders expanding the credit supply.
The conversion of foreign-currency loans into forints by mid-2015 and the continued drop in the share of foreign currencies within state debt will reduce external vulnerability and increase the “manoeuvring room of monetary policy,” the Prime Minister underlined.
The Government is searching for the moment when it can cut taxes, according to Prime Minister Orbán, who also said there is ongoing debate about whether tax cuts should be introduced in the middle of next year or in 2016.
The Government is planning to buy more banking assets in addition to the two acquisitions already realised this year, he said, explaining that the aim with the purchase of Budapest Bank and MKB was to raise domestic ownership in the banking industry above 50 percent, which should boost lending, according to the Government.
Unlike acquisitions of utilities, such as E.ON AG’s gas-storage facilities, the Government plans to sell the two banks within three years.
The Prime Minister also spoke about the so-called “welfare to workfare” initiative, pointing out that the public work scheme has reduced unemployment and, with salaries which are more than double the value of welfare benefits, he said the programme has definitely decreased poverty.
He disagreed with statistics suggesting that poverty has increased in Hungary, and stressed they do not take into account non-financial subsidies such as free textbooks and school meals.
“Economists say that based on what we are doing they can prove that we can’t meet so many goals and cannot establish a prosperous and growing economy that creates jobs. The reality is that we can,” the Prime Minister said.
Bloomberg's publications following the interview can be read here, here and here.