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Varga: Bank levy could be lowered

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Economy minister Mihály Varga said this morning on state-owned M1 TV and Kossuth radio that ongoing talks are under way between the Hungarian government and banks on the matter of reducing the extraordinary bank levy Hungary introduced as a temporary measure for three years in 2010, but made permanent in 2013.

The minister hopes that an agreement will be reached soon and the levy will be lowered in exchange for increased lending. Varga believes banks have been passive in lending in recent years, and the country’s economic growth exceeded 3% while the lending activity of banks remained limited.

Although loans provided by Eximbank, the state-owned development bank, and the central bank's Funding for Growth Scheme have helped, the government would like commercial banks to take a bigger share in lending, he added.

Varga ensured that the bank levy will “definitely” be maintained as it is a necessary source of budget revenue.

The economy Minister said earlier that he was in talks with the bank association on the issue.

On Friday, Hungary’s Prime Minister Viktor Orbán said the bank levy was introduced as a "crisis measure" and noted that the government had made a "commitment", rather than a "promise", to reduce the levy to a level "not unheard of in Europe" once the country's economy has improved. He said the issue could be revisited, "in a reasonable manner", now that the Hungarian economy is performing well, adding that the levy could be reduced "in several steps, in a gradual, planned and predictable manner".

Fraction leader of ruling Fidesz party Antal Rogán said on January 30 that he expects the bank levy to be reduced no sooner than 2016, and that it can only be decreased if banks contribute to economic growth by boosting their lending activity.

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