Hungary's monetary policy appropriately accommodative: IMF
BUDAPEST: The IMF official staff mission undertakes annual consultations under Article IV of the IMF's Articles of Agreement with Hungary's authorities, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.
The IMF said Hungarian economy is performing very well and its vulnerability to shocks has declined substantially, although debt levels and financing needs remain high. Solid growth and a sharp reduction in unemployment are largely due to supportive macroeconomic policies, a favorable external environment, and high utilization of EU funds. While accommodative fiscal and monetary policies have been helping on the growth front, they have at the same time expanded the state's role in the economy and shifted risks to the public sector. In the mission's view, more needs to be done to further reduce vulnerabilities, especially given the fragile external environment, and to transition to growth driven by a vibrant private sector. Growth-friendly fiscal consolidation would help build buffers, while more ambitious structural reforms aimed at improving the business environment, enhancing competitiveness, and addressing labor market weaknesses would boost the economy's growth potential.
The IMF said economy is growing at a robust pace and vulnerabilities have declined. Supportive macroeconomic policies along with a favorable external environment-low global interest rates and low commodity prices-and significant utilization of EU funds have contributed to a strong growth performance over the past two years. Solid employment growth-led by the private sector, but also the continued expansion of public works-has helped reduce the unemployment rate to below pre-crisis levels.