Hun­gary's mon­e­tary pol­icy ap­pro­pri­ately ac­com­moda­tive: IMF

The Pak Banker - - FRONT PAGE -

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.

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