Are you sure?

Reindustrialisation key point of Hungary growth plan

Hungary’s new growth plan places extraordinary stress on reindustrialisation, National Economy Minister Gyorgy Matolcsy said at a conference on Saturday.

The government will discuss the growth plan at the end of the month, Mr Matolcsy said at the conference organised by the Wekerle Sandor Business College.

In a presentation entitled "Success in the Carpathian Basin", Mr Matolcsy said the region was a natural unit in light of its history, traditions and culture. The entire Carpathian Basin can be successful in the 21st century if all of its different parts showing potential operate as an integrated whole, he added.

Matolcsy said that Hungary had reached a turning point, reducing its state debt from 82% of GDP and becoming one of just seven European Union member states that will bring their fiscal deficits under 3% of GDP in 2012, but added that growth remained "a weakness".

Hungary must defend its chances for growth at a time when the euro zone, as well as the global economy, are in a financial crisis, he said.

Mr Matolcsy said the security of Hungary’s state financing could be guaranteed by continuing to finance from the market and reducing state debt, but also by weaving a financial net with international organisations. The last link in this chain is an agreement with the International Monetary Fund (IMF) and the European Union, which the government could sign at the beginning of next year, he added.

The agreement will be a kind of security reserve that can be called down if the economic situation deteriorates drastically in the euro zone, he said, adding that it would not replace market financing.

Mr Matolcsy said financing for businesses was another important element of growth but noted that some HUF 2,000bn in liquidity and lending resources had "disappeared" from the banking system in the past 18 months.

The government wants to use about HUF 1,500bn in European Union funding in Hungary next year, he said. But co-financing is lacking for many EU-supported projects, thus the government is working on forms of cooperation with banks that aim to solve the problem of narrow liquidity, he added.

Hungary can only be successful if the investment rate climbs from 19% to over 25%, he said.