Govt plans more effective supervision with cbank, finance watchdog merger - Varga

Merging the National Bank of Hungary and the financial supervisory authority PSZAF would result in a stricter and more efficient supervisory system, head of the prime minister’s office Mihaly Varga said in a morning television programme on Thursday.

Parliament’s constitutional committee approved for debate an amendment on Wednesday, proposing a merger of the powers and responsibilities of the central bank and PSZAF to create a new organisation.

Mr Varga said the government will also discuss the proposal. "Given that in the past few years there has not been any success in putting a brake on the public debt or reducing the proportion of forex loans in Hungary then it must be asked whether this system really works or not," Mr Varga said.

The state secretary said the government recalculated the budget at Wednesday’s cabinet meeting in Sopron. There are measures planned on both the revenue side and the expenditure side, he added. A readjustment of HUF 100bn-150bn will be necessary to take into account an expected economic growth of 0.5% next year instead of the earlier forecast which was 1.5%, and keep the deficit target of 2.5%, Mr Varga said.

The government continues to reckon with budget reserves of close to HUF 300bn, he said, adding that ministry budgets will be reviewed, creating additional reserves or freezing funds where possible.

Mr Varga said the government will not touch the flat-rate personal income tax, but consumption taxes could be reconsidered.