Hungarian central bank head denies political ambitions
National bank of Hungary (MNB) Governor András Simor denied Sunday he would accept an offer to become Hungarian prime minister and stressed that no such approach from the government has taken place.
Hungary plunged into a government crisis last week when the junior coalition party SzDSz said it would pull out of the coalition April 30. The move will leave the governing Socialists with a parliamentary minority and a dismal popular support of about 16%.
“Investors aren't overly concerned over the current political situation, their primary focus is on economic processes,” Simor said.
Simor noted that the government's ongoing fiscal adjustment program is badly structured as it relies heavily on boosting budgetary revenues and doesn't cut expenses.
“The structure of the adjustment program doesn't support long-term, sustainable economic growth,” Simor said.
“We don't see economic growth picking up significantly in the years to come,” he added.
Gross domestic product growth slowed to 1.3% in 2007, mostly as a result of the fiscal adjustment program. Analysts see this year's GDP growth at around 2%.
Simor stressed that the state should reduce social spending with the equivalent of about 10% of GDP or risk the economy remaining a laggard in the long term. (tradingmarkets)
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