Hungary’s adoption of the euro is “unimaginable before 2020, according to the position of the stars now,” Prime Minister Viktor Orban said at a press conference in Budapest on Saturday.
Orban said he was pleased that eurozone members “will rescue and strengthen the euro”, which “has a bright future”. Meanwhile, Hungary must deal with its own matters in order to allow for the question of when the country will join the eurozone to be asked soon, he added.
At the same time, Orban stressed that, in his opinion, the conditions for eurozone accession will change radically, moving in the direction of a unified fiscal policy among member states. Hungary does not support steps toward tax harmonisation, because the country would lose its competitive advantage compared to other member states, he added.
Commenting on a summit in Brussels on Friday, Orban said that leaders of EU member states agreed that the European economy is not over the crisis and the situation is still extraordinarily dangerous. “There are big waves moving in the direction of European economies,” and at the same time the debt of member states is growing at a faster pace, he said. If the pace continues, the average rate of state debt as a percentage of gross domestic product (GDP) could rise in member states above 100 percent by 2014-2015, he added.
“We are sailing together, but who manages to strengthen their own ship and who not, who is swept away by the water, who sinks, and who can remain standing, who can stay within the ropes and who not, that is everybody’s own problem,” Orban said.
One of the measures to strengthen the Hungarian ship is a stability fund National Economy Minister Gyorgy Matolcsy announced in Brussels on Friday. The government decree on the 250 billion forint (EUR 920 m) fund is expected to be signed by the prime minister on Monday.
Orban said the government would stick to the 2011 deficit target of under 3 percent of GDP. Asked where then the 250 billion forints would come from, he said that was in the competence of the national economy ministry.
The fund will only be used if the economic situation allows it and “the danger is past,” Orban said. The fund is intended to prevent having to make changes to the budget because of unforeseeable external factors, he added.
Speaking about possible changes to the euro-forint exchange rate, Orban said Hungary could not allow that only eurozone members strengthen the common currency; the Hungarian government must work to strengthen the forint, then there will not be a problem.
With the transformation of monetary policy in the next 2-3 months, a sober and efficient form of cooperation must be established between the government and the new Monetary Council of the National Bank of Hungary, Orban said. The cooperation between the two at present hurts the economy, he added.
Monetary policy “belongs to the slow-moving sports”, it requires composure and should not be managed with “push and shove”, Orban said. He dismissed reports that the government has decided to raise the inflation target.
Hungary’s central bank started a tightening cycle in November, the first since October 2008.