POLICY COMMENT: Mattheisen sees little cause for optimism

Banking

How do you see the business environment in Hungary?

It is pretty challenging. One thing that keeps me up at night is what is going to happen with domestic demand next year. We originally expected positive GDP growth, even if it was mostly export-driven. Now, GDP growth expectations are going down every passing week, with the ‘scissor’ in state finances growing wider and wider. This does not give me cause for optimism.

There are of course countervailing impacts on disposable income. For instance, I was not so concerned by inflation, though now, with fuel prices going up, that might change. Indebtedness is certainly an issue, but it is difficult to judge how it is affected by the government’s “végtörlesztés” scheme [for the fixed-rate early repayment of foreign currency loans]. Then there are the tax changes: the flat rate tax is slightly negative, as shown by the fact that many businesses have had to make up the difference to the workers. And of course a rise in “áfa” (VAT) would affect everyone.

In general, I need to pay attention to many more macroeconomic indicators than in the past as the number of risk areas has grown so much. And of course the eurozone crisis and the HUF 300 euro exchange rate don’t help either.

Are there any regulations that you are keeping an eye on in particular?

The biggest issue for us is the frequency tender, which has been moved from October to December. We would like to get enough frequency to serve customers with a high-quality mobile internet service. The use of mobile devices such as the iPad, the iPhone and Android devices is still in its infancy, for it to truly take off, we need more frequency.

 

Do you expect the budget problems to affect the pricing of the frequencies?

Well, we expect to pay money for the frequencies, but the rules are set and known. More I can’t say.

 

How have recent changes in tax policy affected your business?

I would not like to comment on the telecoms tax.

To be fair, the government is chasing a moving goalpost as Hungary’s macroeconomic environment changes. However, after a point, even if a tax is “indokolt” [justified], if there are too many changes in policy, then you could argue that this is a problem in itself. At this point, there are still many changes in progress; we are waiting for the dust to settle before we can draw any conclusions.


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