If you are a relative newcomer to Hungary and from a tradition where the relationship between a country’s central banker and the government is more arm’s length, shall we say, you should know this is not the first time an ally of the prime minister has stepped out of a cabinet role and into the halls of the MNB.

When Viktor Orbán was returned to power in a landslide election in 2010, the governor of the MNB was András Simor, who had been appointed to the role in 2007. Simor was many things: an economist who had served as board chairman of the Budapest Stock Exchange and the chairman and office managing partner of Deloitte Hungary. He would go on to be the vice president for policy at the European Bank for Reconstruction and Development. He would eventually become its senior vice president, chief financial officer and chief operating officer.

What he was not was Orbán’s man, a fact that became an evident frustration to the prime minister, who believed the government and the central bank had to work together to right the storm-wracked economy in the wake of the financial crisis and the subsequent Great Recession. Simor was attacked in the press, and his salary was cut, but he refused to resign early, and Orbán had to bide his time. Simor’s term ended in 2013, and he was replaced by Minister of National Economy György Matolcsy, once described by Orbán as his “right hand.” Matolcsy was succeeded as minister by Varga.

At first, the government and central bank seemed to move in lockstep. Matolcsy, who once complained that others could not see the economy’s potential “with my eyes” and predicted a “Hungarian fairytale” of a recovery, insisted the MNB was independent, but its operation was clearly much more to the liking of Orbán. Matolcsy’s first six-year term was extended. But he has become more openly critical of government policy, and in particular, of Márton Nagy, who had been a deputy governor under Matolcsy until surprisingly resigning to become chief economic advisor to Orbán, and from 2022 Minister of Economic Development, later given expanded duties as Minister for National Economy from 2024.

There was, briefly, some suggestion that Matolcsy was exploring the possibilities of seeking a third term. Whether that was ever seriously considered by him or anyone else, the idea was soon squashed, Orbán pointedly saying that rows between the governor and his ministers would “come to an end in March” when the second term expired.

And so Matolcsy has, again, been replaced by Varga. I can’t pretend to know the new governor, though I have introduced him at several international events I was moderating. He was always charming and struck me as having a self-deprecating sense of humor. I remember him making a joke at an AmCham event years ago during the Pénz7 financial education week (the latest version of which was running in the week this edition of the paper went to print). He agreed to teach a class in a Budapest school and assumed he had done OK as he was still the finance minister. Like his predecessor, Varga has vowed to maintain the central bank’s independence. I suspect that, unlike his predecessor, we won’t be invited to enjoy Hungarian fairytales or see the economy through his eyes.

Robin Marshall

Editor-in-chief

This editorial was first published in the Budapest Business Journal print issue of March 7, 2025.