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Hungarian report Hungarian report
by Euro Reporter
2014-07-07 11:14:15
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Five people in Hungary monitored for suspected anthrax infection

An infection of deadly anthrax has been identified in beef in eastern Hungary and five people are being monitored in hospital for suspected symptoms of the disease, the health authority ANTSZ said on Friday. It said the disease was identified in frozen beef after two cattle were illegally slaughtered in a farm in Tiszafured, a town about 160 km east of Budapest.

The ANTSZ said the five people hospitalized had probably contracted the disease during illegal slaughtering. Some of the beef had been transported to a company that operates canteens, and the operation of the firm had been suspended. The authority said anthrax, if identified in time, can be cured effectively with antibiotics. It is trying to find out if more people came into contact with the infected animals or meat.

The health authority said it had started the vaccination of animals that could be potentially exposed to anthrax bacteria. "Authorities have taken the necessary measures, so there is no longer an immediate danger," the statement said. But it said the food safety office would report the matter to police for purposes of a criminal investigation since the canteen firm had bought meat from illegal sources.

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Hungary Parliament passes bill to compensate retail borrowers

Hungarian lawmakers approved Friday a bill that requires banks to pay a hefty compensation to retail loan borrowers, the government’s first step this year in a series to eliminate households’ foreign-currency loans that will prompt banking-sector losses worth several billion dollars. The legislation approved on Friday may affect credit worth 6.48 trillion Hungarian forints ($28.37 billion), half of which is tied to a foreign currency. The central bank estimated costs to Hungarian banks–the amount of compensation they will pay to clients–could amount to 900 billion forints ($3.94 billion). Hungary’s bank sector is dominated by foreign banks and capital injections from the foreign parents to shore up their local units accounted for the lion’s share of Hungary’s foreign direct investment last year. Banks in Hungary are subject to a bank-sector tax levied in 2010 by the Fidesz-party government, which won in April’s general elections a consecutive second term with a two-third majority in parliament. The latest bill forces banks to compensate both foreign-currency and local-currency loan borrowers for banks’ unilateral interest and fee increases over the past 10 years.

Over the past five years, non-performing loans increased significantly. They reached nearly one fourth of all household foreign-currency loans by the first quarter from only 3% in the first three months of 2009. This increase was partly due to the rising interest rate on foreign-currency loans and the depreciation of the Hungarian forint as well as “moral hazard issues since many households have stopped paying their loans in the hope of obtaining beneficial relief packages [from the government] in the future,” Deutsche Bank economist Gautam Kalani said. The legislation also obliges banks to return foreign-currency loan holders–mostly borrowers of mortgages tied to the Swiss franc–the gains they pocketed since 2004 on charging a higher exchange rate when converting forint repayments into the foreign currency than the exchange rate they applied when disbursing the foreign-currency loan in the local currency. Banks should use the foreign-currency exchange rate medium between the buy and sell rates the central bank sets every day, the bill says. Partly due to higher provisioning necessary in Hungary in wake of the new legislation, Austrian bank Erste Group Bank AG issued on Thursday a warning that its 2014 net loss will total between 1.4 billion and 1.6 billion euros ($1.91 billion and $2.18 billion). Further legislation is set to follow in the autumn, when parliament returns after its summer recess, on how banks should calculate the refunds.

“Going after the banks seems to be the meaning of fun for [Hungarian Prime Minister Viktor] Orban and his government,” said Standard Bank economist Timothy Ash. “One assault is coming after another, just when there were hopes that the aggressive rhetoric and the war was about to end after the elections.” Another blow to banks’ bottom line will come from the governing party’s plan to push through a mandatory conversion of the foreign-currency loans into the local currency by the end of the year at rates lower than the market rate. A risk is “that foreign banks will leave Hungary, and the sector will reduce its already limited willingness and/or ability to provide credit and fund a more sustainable investment recovery,” said BNP Paribas economist Michal Dybula. “While the wealth transfer from banks to borrowers may bolster the consumption outlook in the near term, we think that over the medium term, the loan-refund plan will further curtail lending activity, investment and economic growth,” said. As a result, Hungarian growth is likely to become even more dependent on external demand and fresh foreign direct investment inflows into its manufacturing industry. Exports will become even more crucial given Hungary’s budgetary constraints. With the country’s public debt-to-gross-domestic product ratio still very high, around 80% of GDP at the end of March, “the scope for countercyclical fiscal policy will be very limited in the years to come,” BNP Paribas added.

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Hungary should ease pressure on media and NGOs

A top human rights diplomat said on Friday he had warned Hungary's government to avoid "dangerous" rhetoric, after international criticism of its treatment of the media and civil society groups. Nils Muiznieks, Commissioner for Human Rights at the Council of Europe, who has just wrapped up a fact-finding mission to Hungary, told Reuters in an interview that centre-right Prime Minister Viktor Orban's government was not authoritarian but should pay more attention to minority views. Orban has ruffled feathers since coming to power in 2010 with a two-thirds majority, reshaping Hungary dramatically with little regard to criticism from home or abroad. Since renewing his strong mandate for another four years in April elections, he and his Fidesz party have put pressure on non-governmental organisations they accuse of bias. Some groups have had their offices raided.

Fidesz passed and then tightened a new advertising tax that media companies say will sap profits and undermine their operations, potentially leading to more control by government-friendly business groups.  "I think to cast doubt on the motivations of public interest NGOs or media outlets is quite a dangerous thing, and something that happens in an authoritarian context, and not a democratic context," Muiznieks told Reuters. "I urged the authorities to be very careful in their rhetoric on this."

Muiznieks, an American of Latvian origin who once served in Latvia's government, said concerns about Hungary's media included the spread of self-censorship and a concentration of ownership. Public service media has become an obedient outlet for the government, a Reuters inquiry has found. The government spokeswoman's office did not reply to an email seeking detailed comments on Muiznieks' remarks.

 


       
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