The following is the editorial from the March 11 biweekly edition of the Budapest Business Journal.
By declining to take action on March 9, Hungarian President János Áder performed a brave act and a service to democracy for his country.
Áder (pictured) apparently went against the wishes of the ruling Fidesz party that appointed him by refusing to sign legislation to allow the Post Office and the National Bank of Hungary (MNB) to spend public money without revealing how that money is spent.
The troubling aspect of the law classifying Post Office spending was that it was retroactive in nature – potentially allowing any corrupt practices that have already taken place to be hidden from view. Even more disturbing was the legislation making the spending of the MNB’s Pallas Athéné Domus Animae Foundation a secret.
The stated purpose of the central bank-funded foundation is to support education, especially education in the kind of “unorthodox economics” that the current Fidesz government ushered in, beginning around 2010. For some reason, the Pallas Athéné Domus Animae Foundation has also been involved in buying high-profile historical properties.
The idea that hitting banks, telecoms and supermarket chains with special levies – and taking over private pensions as a way to fill holes in the state budget – is a new kind of economics that needs to be taught is questionable. The bank’s use of the money that is supposed to support such an educational initiative to purchase expensive landmark properties seems even more dubious. But the MNB’s desire to use HUF 260 billion in public money without accounting for that spending is absurd.
A judge sensibly ruled in early February that the foundation must open up its books. Rather than comply with the order, the Fidesz government pushed through a law that says the MNB’s spending through foundations is no one’s business. The law is such an affront to the basic workings of democracy that even Fidesz stalwart Parliamentary Speaker László Kövér appeared loath to sign it, and waited the maximum six days before doing so.
There are two problems here: The first is that the central bank seems to be straying well beyond its natural remit, and the second is that the public has a right to know how its money is spent.
As for the first issue, a national bank is meant to be a lender of last resort and to protect the currency. The bank should control the money supply and promote financial stability. Speculating in real estate is not something that you want a central bank to do.
The second issue is more serious. Transparent governance should be a prerequisite, but the current leadership seems completely uninterested in the public’s right to know about any of the government’s fiscal dealings. This is only the latest in scores of instances involving the appearance of corruption by this government. Transparency International announced on March 4 that corruption in Hungary is rampant, when it comes to awarding European Union grants and public procurement in general.
President Áder surely faced intense political pressure to go along with the legislation and let the bank hide its use of public funds. Instead he cited the need for openness in public spending and sent the bill to the Constitutional Court for clarification by early April. Now it is the Constitutional Court’s turn to show courage. We hope they are as brave as the president, and decide to protect democracy instead of bowing to those in power.