Hungary could come out of the crisis more economically competitive than its neighbors in the region, Finance Minister Péter Oszkó told MTI.
Small open economies stand to benefit from the pickup in global economic growth and growing demand on global markets, Oszkó said. But this also depends on how a country does on the “tests”" of competitiveness and debt, he added.
Thanks to tax changes and measures to slow down the drop in employment, Hungary could become the most competitive of the Visegrád Four countries (Hungary, Poland, the Czech Republic and Slovakia) from 2010, Oszkó said. A further task is to lower the tax burden on labor, but measures already taken will make labor costs cheaper than in Slovakia or the Czech Republic, he added.
If demand for products and services grows, Hungarian companies can start making competitive offers already from next year, he said. The forint's stable exchange rate also helps, he added.
Speaking of the country's indebtedness, Oszkó said it is not necessarily the existing debt that matters, but rather the chance of reducing the debt without further austerity measures burdening the economy. A country does not just have to be competitive in the moment the global economy starts growing, but must be able to prove that this position is sustainable in the long term. “An economy that has already done the hardest part of the job and is set on a falling debt path will be able to stay competitive”, he said.
Oszkó noted that a number of countries in the region will have to introduce tighter policy measures later on to reduce their debt, either increasing taxes or cutting expenditures. Thus, their competitiveness will deteriorate from the current level in later years, which means Hungary will be in a better position. Oszkó said this also requires Hungary to stick to the economic path it is already on, the path accepted and recognized by international experts as well.
The 2010 budget serves to improve competitiveness, Oszkó said. Although parliamentary approval of the budget was a milestone, Oszkó said he saw the remaining tasks as equally important. Among the tasks for the future are strict and disciplined implementation of the budget and the restructuring of the big state-owned companies such as railway company MÁV or the Budapest transport company BKV, which - just as the central budget - must also be set onto a path ensuring that the future results will be clear, he said. “We need to take measures ensuring that these companies will be able to eliminate their debt in 2-3 years and continue operating without generating further debt,” he added. (MTI-Econews)