March 12, 2013 / 12:35 PM / 6 years ago

HIGHLIGHTS-Hungary PM Orban's remarks on economy

BUDAPEST, March 12 (Reuters) - Below are selected comments from Hungarian Prime Minister Viktor Orban on the central European country’s economy. For the main story, pls see


“A significant part of the Hungarian banking system is in foreign hands. When trouble hits the banking system then foreign banks begin treating their problems by reducing their loan books in foreign countries. The more serious their problems are, the more drastic and faster this contraction is, shutting a given country’s businesses out of lending. That’s what happened in Hungary.

“The moral of this is singular: it is not healthy that the owners of the Hungarian banking system are foreigners to the extent that they are, because it comes back to hit us the most in a crisis situation.

“Therefore - obviously respecting international agreements and relevant economic norms - we must strive to increase Hungarian ownership in the Hungarian banking system. The government has a target number about that, we would like for the Hungarian banking system to be at least 50 percent Hungarian owned.

“As you know the state acquired a stake in (savings cooperative) Takarekbank. We will try to transform the savings cooperatives into a system that can handle nationwide lending. That work has started. As you probably see there are changes around the national post as well - there are institutions in the state realm that can handle financial transactions and such matters. We are working on how to bring them together in a way that would make financing the Hungarian economy easier.”


“Under current circumstances, when an entrepreneur goes into a bank for a loan he can hardly get anything cheaper than 8-10 percent. I can tell you there are very few businesses in Hungary that could make the kind of profit you need to pay back that loan without a problem.

“Without trying to tell the central bank what to do, it is a key question that the interest rate level in Hungary become lower, that in some way the government, the central bank, business associations and others can present a plan to businesses that enables them to take out corporate loans not just a little, but significantly below 8-10 percent.”


“The issue of foreign currency loans is one of national sovereignty as well. Of course it is a matter of living standards, family housing, businesses making it or not, but in my mind it is fundamentally a matter of sovereignty. Because if our foreign currency debt exceeds a certain level - be it the state, local governments or businesses - it means that even as we have our own currency, which is an advantage versus the euro zone, we cannot take the advantages because the foreign currency loans keep us captives of our foreign exchange policy.

“There is one way to break free: if we break free of foreign currency lending. You probably watch as we strive to renew our expiring foreign currency state debt in forints. We did the same thing with families because household mortgages are the most pressing problem.

“But we need to pay attention to small business loans as well. Thus far we have not been able to do anything through fiscal means to convert the foreign currency loans of small businesses into forints. That is a problem. The truth is that there wasn’t any more money in the budget than needed for the early mortgage repayment scheme and the conversion cap scheme. But in this half year we need to find financial programmes that would enable small businesses to convert their earlier foreign currency loans under favourable, perhaps even attractive, conditions.”


“Not even our most ardent opponents argue whether there will be growth in 2014 in Hungary. There is complete agreement about that: in 2014 there will be palpable growth in Hungary. The debate is about whether there will be growth already in 2013.

“Once already we have been able to grow during the crisis, in 2012. Therefore I am one of those who say there will be growth in 2013 already. In the budget we reckoned with a growth of 0.7 - 0.9 percent, and I would be very disappointed if we do not exceed that number measurably this year.

“I do not think it’s impossible that from July 1 we will launch job protection schemes similar to the one we launched in January this year. If the fiscal figures come in nicely, and let’s not exclude that, then using and expanding further such tools may be an option.”


“I see a country full of doubt. I must tell you we are doomed with that attitude. It won’t work like this. A country that does not dare to set the goal to stand on its own two feet - including its property, its jobs, its financing, and even its biological survival - if it does not believe it can do that then that nation must perish. It has no place. It will fail in the competition of nations. It will perish in a biological, financial and competitive sense.

“We have more than a chance to survive. We have our own future. But to get there we must get back our freedom to act. Politicians cannot shrug and say ‘it’s not my fault, you know, those people in Moscow, in Brussels, in Washington...’ It’s always someone else, never us.

“Therefore the entire IMF problem is about a lot more than just the IMF and the country’s financing. It’s about whether we can prove that even when cornered we can make a national policy that can help us find our friends among our enemies, create alliances and remain standing on our own two feet.

“And observe: what we asked from the IMF, they would not give us. They did not offer us the Flexible Credit Line, and they threatened us that if we didn’t take what they offered instead we would collapse. The IMF saga is about a lot more than the fact that we did not collapse, that it turned out we could go to the market and take a loan not for 3 years like the IMF offered but for 5, 10 years and get the loans we need for the Hungarian economy to function. That we can keep the Hungarian economy running even without the contributions from international institutions.

“In reality, this story was about whether we believe we can stand on our own two feet. The struggle to regain our freedom to act is our most important struggle, which you can call a freedom fight, seeing as we are considered 19th century, but the exact way to put it is the struggle to regain our freedom to act.

“Energy price charts tell us the same story. That we have a crisis that shakes everyone while a couple of sectors, ones that are mostly foreign owned, look like they operate in a crisis free environment. Obviously we won’t accept that situation.

“Now, when the immediate reflex comes, saying this conflicts with investment protection agreements, what will Mrs. Merkel say, what will he or she say - you can’t govern like that. You can’t live like that. Therefore the Hungarian government’s policy to increase its freedom to act, its autonomy, belongs right amongst the most important issues of economic policy, even if one cannot describe it through numbers but in ways that I just tried.”

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