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Parlt Cttee Endorses Matolcsy’s Renomination as Cbank Governor

MTI-Hungary Today 2019.02.26.

Parliament’s economic committee on Tuesday approved the renomination of György Matolcsy to head the National Bank of Hungary (NBH) for a second term.

The nomination was approved with 10 votes in favour and 5 against.

Matolcsy told the session that over the past six years he had been successful in fulfilling the requirements of his mandate and had contributed to Hungary’s “exceptional growth turnaround”.

All of Hungary’s micro and macroeconomic indicators show a favourable situation, he said, adding that this was in part thanks to the work of the NBH. The central bank’s interest policy has saved the state budget 2,400 billion forints (EUR 7.5bn) in interest payments, Matolcsy said.

He said the NBH had achieved “price stability”, keeping the consumer price index in a +/- one-percentage-point tolerance band around the 3 percent mid-term target; the central bank had ensured the financial stability of the country; and it had helped to implement the government’s economic policy.

He said convergence had been marked due to the strong pace of growth: investments rose by 40 percent and consumption climbed 20 percent, supported in large part by the NBH’s Funding for Growth Scheme. If there had not been a strategic alliance between the government and the NBH during the period, this growth spurt would have failed to materialise, he added.

“The NBH has been judged many times in the past six years for overstepping its mandate. This is incorrect because supporting the economic policy work of the government is among the tasks of the central bank,” he said.

The NBH is also making a big contribution to the restructuring of the system of higher education in Hungary, and it is bettering instruction in basic financial knowledge, he added.

The NBH’s foundations have supported improvements in higher education in the areas of finance and economics, even while increasing their endowments, he said.

Answering a question about the de facto nationalisation of private pension funds, Matolcsy said Hungary had successfully managed the crisis using a mix of conventional and unorthodox tools. He called the introduction of the private pension funds “a mistake” and noted that 97 percent of private pension fund members had opted to return to the state pension pillar.

The prime minister’s press chief signalled on Feb. 12 that Viktor Orbán would nominate Matolcsy for another term as NBH governor. Matolcsy’s six-year mandate as NBH governor ends on March 3, 2019. There is a two-term limit for NBH governor.

featured photo by Szilárd Koszticsák/MTI