The Hungarian government’s utility price cuts are unsuitable, as people and businesses need to feel the burden of high energy prices to start saving, Sándor Csányi, Hungary’s wealthiest man, chairman and CEO of the country’s biggest commercial lender OTP Bank, said at an event on Monday.
Speaking at the Agrarian Gala, Csányi said that the “era of cheap money” is over. In Hungary, interest rates could rise to as much as seven percent, and inflation is “out of control,” with a range of 2-4 percent only being reacheable by 2024 earliest. The good news is that loans are still available in the meantime, and the financing of the economy will continue, Hungarian news agency MTI quoted the OTP CEO as saying.
Sándor Csányi said that this year – after last year’s 7.1 percent growth – the Hungarian economy could expand by only 3.5 percent, the budget deficit could be higher than expected, and the balance of payments deficit could be around eight percent. He cited Hungary’s energy bill and the sluggish car industry as the backdrop to the deteriorating macroeconomic data.
OTP’s CEO stressed that high energy prices are expected to persist in the long term, which is why there is no alternative but to adapt.
He added: “utility price cuts do no good.” People and businesses need to feel the burden of high energy prices to start saving.
According to OTP’s CEO, to reach a 4.9% central deficit, an adjustment of HUF 500 billion is needed with an EU agreement, but without it, the deficit would have to be adjusted by HUF 1,700 billion. He said that if Hungary successfully reaches an agreement with the EU and the war ends, a quick recovery can be expected, just like after the coronavirus epidemic.
Featured photo by Balázs Mohai/MTI