Benevolent criticism of Matolcsy’s stimulus project
April 13th, 2013A conservative critic of government policies thinks the new growth-oriented credit scheme announced by the National Bank may help, but only if Hungarian small businesses are competitive enough and banks are ready to embrace the project.
“You can lead a horse to the water trough, but you cannot force it to drink”, Tamás Mellár, comments in Heti Válasz on the stimulus project announced by new National Bank chief György Matolcsy one week after his appointment (see BudaPost, April 6). Mellár is a former Fidesz advisor turned critic, out of disagreement with Mr Matolcsy’s “unorthodox” economic policy, while the latter was Minister of the National Economy. He does not reject the stimulus package out of hand, arguing that interest free funding for commercial credits, as well as dedicating ten per cent of monetary reserves to converting forex debt into forint loans might be useful. However, for the scheme to work, both banks and enterprises should be willing to take the risks in providing and taking loans in a rather unfavourable economic environment, where demand is low. The economic crisis, he notes, still lingers and the new technologies that will pull the world out of the present stagnation have not surfaced yet. Mellár also agrees with Matolcsy that the MNB can well afford to dedicate 3 billion euros to help reduce forex debt. However, the programme will either help only a fraction of companies or it may endanger the stability of the Forint. Mellár finds the MNB’s reasoning that the inflation and deficit targets have already been reached so it is time to launch a growth-oriented programme, somewhat risky. The economy is too fragile for bold experiments, he says, and although he agrees that the horse must be fed some water, he cautions against pouring the wrong liquid into the water trough.