Hungary central bank panel was rushed into vote on stimulus


Júlia Király, deputy governor of Hungary's central bank, has said she abstained from voting on the bank's economic stimulus plan this week because she was only given 35 minutes to read the 40-page document before it was debated and put to a vote in the bank's Monetary Council. Hungary's new central bank governor, former economy minister György Matolcsy, launched plans on Thursday to help small- and medium-sized firms survive economic recession and get cheap credit worth around $2.1 billion. The plan was met with relief by markets, who had been expecting that Matolcsy, an ally of Prime Minister Viktor Orbán, would adopt measures that were more high-risk to try to jump-start the spluttering economy. But some in the market have said they are concerned that the government might in the longer term erode the independence of the central bank and its ability to veto any policies that it feels endanger economic stability. Júlia Király, the only one of the Monetary Council's eight members not appointed by Orbán or his Fidesz party, said she had abstained from the debate and the voting on Thursday as she felt there was not sufficient time to consider the proposal. "The Monetary Council received the official proposal yesterday at the meeting and had 35 minutes to read the 40-page document before it was debated," Király told Reuters on Friday. Király said she believed the stimulus measures were unlikely to give a boost to growth, though she declined to say why. On Friday, when asked about the amount of time the panel had been given to study the stimulus measures, the central bank's press office emailed Reuters to say: "The agenda of the meetings of the Monetary Council is not public, the proposals on its agenda are classified." Király said the council had not discussed the plans before in any of its sessions, and that she had had no knowledge of the proposal before Thursday. It was not possible to establish if any of the other members had been briefed on the document earlier, outside the council's sessions. Reuters tried to reach two of the other members of the Council to seek their comment, but they were either unavailable or declined to comment.  voting breakdown of the meeting has not been published, but deputy governor Ádám Balog told Reuters on Thursday that a majority of the Council had backed the measures. It is not known if anyone else abstained or rejected the plan. The bank hopes the plan will kick-start weak lending and support the government's economic policies. Many investors view a strong, independent central bank in Hungary as a protection against possible high-risk economic policies by a government that has often clashed with the European Union, United States and international lenders. If that independence is compromised, they say it could make holding Hungarian assets less attractive. In his first weeks as governor, Matolcsy dismissed three of the bank's most respected senior economists and put allies into key positions at the central bank. The bank has said the dismissals were designed to keep a lid on costs. The prime minister has said the central bank and government must be in "harmony" if Hungary is to perform well.

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