Hungary sees price, financial stability since 2013, Matolcsy reports

Budapest, November 4 (MTI) – Hungary has enjoyed price and financial stability since 2013, when changes got under way at the central bank, the bank’s governor, Gyorgy Matolcsy, said on Wednesday.

Addressing lawmakers in parliament in a debate of the bank’s 2012, 2013 and 2014 business reports, Matolcsy said the bank’s new leadership in place since March 2013 had returned to a “responsible, conservative, but creatively functioning” path for the central bank. The bank has supported the government’s economic policy, he added.

He said by 2013 the central bank had amassed a loss of 203 billion forints (EUR 645.5m) and in that year Hungary was trying to emerge from the excessive deficit procedure the EU had launched against it. The new leadership had worked down the debt and ended that year in the black, Matolcsy said. He said as a result Hungary had succeeded in exiting from the deficit procedure.

As regards a renewal in monetary policy, Matolcsy said the base rate had been reduced in two cycles and as a result the budget is 300 billion forints a year better off due to lower interest rates. The savings will add up to 500-600 billion forints a year by 2019, he said.

The bank’s funding for growth lending programme is expected to channel 2,300-2,400 billion forints into financing for small and medium-sized companies (SME), and more companies could benefit than under the 2007-2013 EU financial framework. The bank’s self-financing programme has helped to move bank financing towards state securities and now, with a new step, efforts are being made to stimulate market-based lending.