The OECD, Hungary and Threats Posed by Lifeless Ruminants
As reported on Page 5, the OECD, the Organization of Economic Cooperation and Development, released its latest economic survey on Hungary at the end of January.
While not exactly bedtime reading, these publications are a treasure trove of facts and information on the target country: at 180 pages, its text is liberally interspersed with graphs, tables and statistics,
The latest on Hungary offers insights on subjects as diverse as the number of avoidable hospital admissions to the export share of wine production. (For the record, Hungary scores poorly on the latter, and appallingly on the former.)
Of course, at their core, these surveys provide a comprehensive overview of economic policies and issues that comprises the daily diet of business journalists, so the press conference invitation for the launch of the 2019 edition provoked a quick and positive response.
Alvaro Pereira, OECD Director of Country Studies, gave what could be termed the keynote address, a synopsis of the survey. As reported, the Portuguese economist lauded Hungary’s recent economic progress, highlighting the growth figures, salary trends, the record employment data, foreign investment: tax policy, specifically the 9% corporation tax and 15% flat-rate personal income tax, received special praise.
Pereira did note challenges, including the risk of inflationary pressures, the disparities between the haves and have nots, and funding problems for healthcare and pensions, but it was clear that journalists from government-friendly media would have no problem making their word count.
For what was striking was what was unsaid: for a start, the European Union, which has provided EUR 3 billion in net funding every year since 2013 to support the Hungarian economy, received no acknowledgement whatsoever in Pereira’s overview. (It is barely credited in the full report.)
Further, in his appraisal of tax policy, Pereira omitted to mention a clutch of government “reforms” that contradict stated OECD goals. For example, while highlighting the hapless condition of the state pension system and stressing the need for sustainable reform, he ignored the 2011 legislation which destroyed the mandatory funded pillar.
And when gushing praise on tax policy – and to advocate more-inclusive policies to help the poor ten minutes later – he forgot to mention that the introduction of the 15% flat rate PIT was accompanied by the elimination of the 0% bracket, leaving lower income groups worse off.
But there was an even more glaring omission that no serious assessment of the Hungarian economy could possibly ignore: nowhere in his 28-minute address did Pereira allude to corruption and resultant economic damage; this despite a plethora of evidence compiled by investigative reporters and institutions such as Transparency International on all governments since the fall of communism.
Moreover, unlike previous OECD presentations, the “press conference” was closed, with no public media questions.
Asked to explain the lack of reference to corruption, Pereira replied: “You can see it in our power point presentation: in every single survey of the OECD we highlight this issue.” Why then, did this slide not feature in his presentation?
“Because I was focusing on long-term challenges, the regional focus and pensions,” he said.
The OECD’s “core values” include the pledge to be “bold”. Bold? Pereira’s presentation reminded this correspondent of the deceased British politician Denis Healey, who, after criticism by the mild-mannered Geoffrey Howe in parliament, commented: “It was like being savaged by a dead sheep.”
The Bottom Line is a monthly column written by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest Business Journal. To comment on this column, or on anything else in the BBJ, email the editor at email@example.com
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