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Hungary wins back confidence on global capital markets

Global markets see Hungary as a reliable economic partner thanks to government measures, National Development Minister Tamás Fellegi said at a meeting organized by the Hungarian Business Leaders Forum on Friday.

Fellegi cited the $13.5 billion in bids for a recent $3.75 billion bond issue by Hungary as proof the country has won back investor confidence. Recently announced investments by foreign companies worth some €2 billion are another sign of investor confidence, he added.

The government's biggest success to date has been creating a stable financial position and bringing the country "from the edge of the abyss", and all this without austerity measures, Fellegi said, answering a question.

Fellegi said Hungary's new, broad National Energy Strategy was issued for public debate on Friday, before it is finalized. The strategy, which is in line with European Union requirements, runs until 2030 but also offers an outlook as far as 2050, he added.

The government is taking steps to reduce the cost of bureaucracy to businesses by HUF 500 billion including HUF 105 billion to be cut in 2012, he said. These costs add up to HUF 2,800 billion for companies at present or 10.5% of GDP, he added.

Fellegi noted that the OECD put Hungary among a list of countries that had made the biggest tax cuts in its latest report.

Hungary's new Public Procurement Act is being finalized and it is hoped the legislation will be approved by Parliament by July, allowing it to come into force in the autumn, he said. The law eliminates loopholes with the aim of cutting back on graft and corruption, he added.

The government will soon submit to Parliament a national directive on managing state assets that assumes privatization in Hungary is over, Fellegi said. Foreign direct investment can no longer be brought to Hungary through privatization, rather existing state assets must be managed efficiently and cost-effectively, increasing their value where possible. In the case of companies majority-owned by the state, business considerations must be balanced with the public good, he added.

A uniform inventory of state assets will be completed by the end of 2011, he said.

The government will cancel unfavorable public private partnerships (PPPs) but can only accept their redemption or restructuring at the real value of the investments, Fellegi said. There are about a hundred PPPs in the country that represent a HUF 3,000 billion fiscal burden over the period they are valid, he added.