Government plans to convert forex debt, cut utility tariffs

A centrist-liberal commentator accuses the government of hindering economic growth in an effort to increase its popularity before next year’s election. Another determined critic of the government thinks the scheme will work because it meets well established public expectations.

At a meeting before Parliament convenes for its autumn session, Fidesz and KDNP MPs decided to impose another 11.5 per cent cut in utility tariffs, following a 10 per cent cut earlier this year. In another statement they urged banks to convert forex mortgages into forint debts by the 1st of November.

In his Origo column, business commentator Csaba Gaál claims that “rolling back the market economy” has become the norm in East-Central Europe, with unorthodox policies such as the re-nationalisation of compulsory pension funds from Poland to Slovakia. As for Hungary, he condemns the governing parties in no uncertain terms for planning to cut utility tariffs, as well as the latest initiative to phase out forex debts and the various banking taxes introduced in the last few years. He compares such measures to “Communist era spending” even if the burden is on banks and utility companies. Political parties look for short term gains and a credit crunch or the faulty maintenance of the electricity grid have only long term consequences, Gaál argues. He fears that the deterioration of the institutional environment will damage long term growth prospects.

In a bitter comment on HVG online, Attila Mong believes “the Orbán regime is about to be cemented in Hungary” because it offers what the population wants most: an impression of stability. What Hungary needs is the ability to adapt, change and innovate, he complains, but people pine for stability and that is exactly what PM Orbán promises them. This has been the traditional attitude since the 1970’s, he continues, “stupefying people with the message that all is well and you don’t have to do anything”.

Tags: debt, utility tariffs