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He argued that the move could also anchor inflation expectations, stabilize the exchange rate and lower financing costs.
Speaking at a conference in Budapest, Tardos said the government’s decision to make euro adoption a goal had fundamentally changed expectations surrounding Hungarian economic policy.
The budget plans for next year and the medium term rely on conservative estimates and set out a realistic fiscal path, contrasting with earlier overly optimistic forecasts, he said.
Foreign investors’ holdings of Hungarian government securities have risen from HUF 6,000 billion to HUF 11,000 bln, which Tardos described as a significant vote of confidence in the country’s economic policy.
Tardos identified yield convergence as another expected benefit of euro adoption, noting that Hungarian 10-year government bond yields had fallen from 7.2% to 5% following April’s general election.
Long-term yields could decline to around 4% by the time Hungary enters the European Exchange Rate Mechanism, known as ERM II, he said. A favorable geopolitical environment could allow further reductions.
That could help lower annual debt servicing costs from approximately HUF 4,000 bln to HUF 2,000 bln, he added.
However, Tardos cautioned that countries previously facing high interest rates had experienced rapid credit growth after adopting the euro, creating additional risks.
He also said there was a strong possibility that all three major credit rating agencies would revise Hungary’s negative outlook before the end of this year, potentially followed by rating upgrades in 2027.
Such improvements would depend on consistent adherence to the government’s fiscal trajectory and continued progress toward euro adoption, he said.
Pál Péter Kolozsi, managing director of economic research institute GKI, said adopting the euro would not, by itself, resolve Hungary’s competitiveness and structural problems.
It could nevertheless strengthen market confidence, create a more stable financial and exchange rate environment and help catalyze improvements in competitiveness.
Meeting the Maastricht criteria alone would be insufficient, Kolozsi said, emphasizing the need for convergence in the real economy as well.
Euro adoption should be viewed as the start of a new phase rather than the completion of a process, he added. Fiscal and other financial requirements would need to be maintained after entry into the currency union.
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