PM says Hungary could adopt euro by 2014 with political consensus

Hungary needs a consensus between its major political forces on adopting the euro, possibly by 2014, Prime Minister Gordon Bajnai told public television on Sunday evening.

In order to start following a benign path, like the ones seen in Ireland, Sweden, Finland and South Korea in recent years, the main political forces must agree on an economic policy to pursue and on the need for adopting the euro, Bajnai said in a televised interview on channel M1. If Hungary can maintain its deficit target and its current economic policy, the euro can be introduced within four years, he added. Past governments have set a number of dates for euro accession over the years but none of these were fulfilled, which is one of the reasons why confidence in Hungary has fallen.

The opposition’s remarks about a budget deficit target raised to 7-7.5 percent of gross domestic product, “made in the heat of the election campaign,” would push the euro introduction date further away, Bajnai said.

Bajnai said it would be unwise to scrap the newly introduced wealth tax, as promised by the opposition if it wins the election. He said it would be all the more surprising if the Constitutional Court decides to eliminate the tax, as the government had followed their recommendations precisely when shaping legislation on it. In any event, if the wealth tax was scrapped, a gap of 50 billion forints (EUR 185m) in the budget would have to be filled, Bajnai said. This could only be done by freezing reserves or introducing another type of tax, he added.