National Bank of Hungary (MNB) Chairman András Simor told journalists on Friday that Hungary’s 2008 general-government deficit could be as low as 3.6%, while there is a realistic chance that the country’s 2009 fiscal deficit could decline to 3.2% of GDP.
Simor said that an increase in the credibility of Hungary’s monetary policy could be among the factors contributing to the forint’s recent strengthening. The MNB chairman added that recent major deals, such as June announcement that German car company Daimler-Benz had chosen Hungary as the site of a planned €800 million eastern European plant, may have also contributed to an improvement in the assessment of the country.
Simor said Hungary should spend as little time as possible in the ERM-2 pre-euro exchange-rate mechanism and possibly next year set a date for adopting the euro. Simor said external risks are “on the rise.” The effects of the increasing price of oil price cannot be stopped at the border, Simor said, adding, however, that it is the role of MNB to soften through monetary policy any influence this increase might have on inflation.
Simor said that no new information regarding Hungary’s economic fundamentals have emerged since the Monetary Council elected to keep key-interest fixed at 8.50% on June 23, although the behavior of markets has changed significantly since that date. The MNB’s August Inflation Report will serve as the basis for judging any future moves, Simor added. (MTI-Econews)