ECB reviews Hungary’s euro convergence progress in biannual report

The European Central Bank (ECB) said Hungary needs “stability-oriented economic policies” and “wide-ranging structural reforms” in a report on euro convergence released on Wednesday.

The ECB reviews the progress of members states, which have not yet adopted the euro, in “fulfilling their obligations regarding the achievement of economic and monetary union” in its biannual Convergence Report.

“Hungary would benefit from structural reforms aimed at promoting private sector-led growth, such as by improving the governance of institutions and by cutting red tape and tax burden where excessive,” the ECB said.

“In order to further bolster confidence in the financial system, the national competent authorities should continue to improve their supervisory practices, among other things, by following the applicable recommendations from the relevant international and European bodies, and by collaborating closely with other national supervisors of EU Member States within the supervisory colleges,” it added.

The ECB noted that Hungary had met the Maastricht criterion for the budget deficit last year, but had exceeded the threshold for state debt. Long-term interest rates were under the reference value, but inflation was over the threshold, it added.