Oszkó says gov’t establishing conditions for long-term growth; forint no danger
The government’s current crisis-management measures and tight budget policy will give the country an advantage in the long term, establishing the conditions for economic growth when the upturn starts, Finance Minister Peter Oszko said at an event organised by foreign business chambers in Hungary on Tuesday.
Hungary’s growth rate could jump in 2011 and 2012 after the present phase of restrictive crisis management if the next government goes on with a tight and consequent economic policy, Mr Oszko said.
The government continues to project a 0.9pc economic contraction for 2010 which could be followed, however, by growth of 3pc or more from 2011 on, he said.
Foreign investors sent a clear message to Hungary at the start of the crisis by stopping purchases of government securities because they saw the country’s high level of state debt as too risky and economic growth too low, Mr Oszko said. Hungarian households’ high level of debt also strained domestic demand, causing another problem, he added.
For these reasons, the government concentrated on reducing the level of state debt and improving economic competitiveness, he said.
Hungary’s next government will have to continue the current one’s economic policy, because budget consolidation in and of itself will improve the country’s competitiveness, he added.
Says weakening forint no danger
The forint has weakened in the past days because of movements on global markets and presents no danger to money markets in Hungary or the stability of the country’s financial institutions, Oszko said on Tuesday, answering a question by a journalist.
The forint weakened sharply overnight before firming back to around 279 on Tuesday.
A deal for 288.60 forints to the euro was made immediately after one for 278.50 overnight, which triggered stop-loss transactions, Raiffeisen currency trader Istvan Gondi told MTI. The forint firmed past the 280 mark shortly afterward, he added.
The forint traded around 264 to the euro on October 21. It last traded as week as 280 in July.