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Hungarian report Hungarian report
by Thanos Kalamidas
2012-09-14 08:25:55
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Hungarian rate-setters say it’s time to support growth

The Hungarian central bank’s August’s rate-setting meeting not only brought a surprise rate cut, but also sparked a shift in approach for the Monetary Policy Council, according to newly published minutes. Hungary’s central bank lowered its base interest rate by 0.25 percentage point to 6.75% in late August. Throughout the year, however, the messages from the MPC cited the international risk environment and elevated consumer price inflation as the obstacles to cutting the rate. This time, however, the majority of the MPC members found that there had been a sustained improvement in perceptions about the Hungarian economy and voted for the cut.

The minutes would indicate that the divide within the MPC’s internal members is deepening — with governor Andras Simor and his two deputies on one side, and the four external members appointed by the current parliamentary majority on the other. The minutes show that the two groups disagreed about the cause of the improved perception of risk as well as the potential effect of monetary easing on the economy.  Some members — presumably the minority — also stated that the rate cut went against earlier communication from the central bank and risked hurting its credibility. The dovish majority also highlighted a new priority, which didn’t feature prominently in the central bank rhetoric before. “The majority view of the Council was that it was time to act in the interests of growth,” the minutes read. Hungary’s economy contracted by 1.3% on the year in the second quarter and the central bank’s own research forecasts recession for 2012.

Bank analysts are currently providing mixed projections about the course of action they expect the central bank to take at its next meeting at the end of September. The doves have shown that a rate cut is possible even before the government reaches an agreement with the European Union and the International Monetary Fund. A deal will surely not be in place by the next rate-setting since Hungary’s top negotiator, Mihaly Varga, now expects the EU-IMF talks to continue in October. Given the current favourable market sentiment, the still relatively firm currency and the recessionary outlooks for the national economy, September is poised to bring yet another cut, with a similar voting margin.


Hungarians stage a fast over rules for voters

The dispute seems arcane, but in Hungary the passions behind it are running high -- high enough that a former prime minister has begun a hunger strike over it. The weeklong fast being staged in tents outside the Hungarian Parliament in Budapest is the latest and most eye-catching protest against the policies of the country's current prime minister, Viktor Orban, who has been accused of undermining Hungary's young democracy. The immediate issue is a proposal to start requiring anyone who wants to vote in an election to register at least 15 days in advance, a practice followed in many other countries. Opponents claim that it would give the ruling party a big advantage and would be vulnerable to manipulation. The hunger strike is a vivid symbol of the passions stirred by the policies of Mr. Orban, the charismatic leader of the centre-right Fidesz party and onetime anti-Communist campaigner, who has been accused of concentrating too much power in the hands of his supporters.

Ferenc Gyurcsany, the former prime minister from the Democratic Coalition who began his public fast with three colleagues on Sunday, is a controversial figure himself, not least because of a voice recording that surfaced in 2006 in which he is heard saying that he and his party had lied to voters about the economy to win an election. Developments in Hungary have highlighted the fact that, though the European Union can wield significant influence over a country when it is applying to join, and can oblige the applicant nation to adopt reforms, it has much more limited leverage once the nation is admitted.  Hungary joined the union eight years ago as one of 12 new members, most of them ex-Communist, that were added from 2004 to 2007. Populist leaders have since won office in a few of those countries, but none have clashed as openly with the European authorities as has Mr. Orban, now in his second term in office.


Hungarian opposition calls on ‘morally bankrupt’ Orban to quit

The Hungarian prime minister is “morally bankrupt” and should resign after admitting that he personally approved the transfer of the Azeri axe murderer while knowing the likely consequences, the leader of the opposition Socialists said on Sept. 11, says an article of Hungarian news agency MTI, published in Asbarez. Attila Mesterhazy said it was clear from Orban’s comments at a news conference today that he had been aware that Azerbaijan would release the life-sentenced Ramil Safarov after his repatriation. Mesterhazy said Orban had been warned by Foreign Minister Janos Martonyi and Justice Minister Tibor Navracsics about the likely consequences and he took the decision nevertheless. Orban took this decision “without thinking” and is the only one to blame for the scandal, he added.

If Orban refuses to resign, Fidesz lawmakers should try to control him and prevent his actions from causing further damage to the country, the Socialist leader said. Orban told a press conference earlier in the day that “nothing happened after our decision that we did not expect”. He was responding to an article published by the online news portal origo.hu which accused Orban of ordering the transfer of Ramil Safarov with full knowledge that he would be released on his return to his homeland sooner or later. Orban said the decision was taken at a government level and all ministries affected were involved, but he, “naturally, as always,” had the final say.

Janos Lazar, head of the Prime Minister’s Office, rejected information that the issue had been discussed at a recent Fidesz board session. He said that Prime Minister Viktor Orban had not given any kind of instruction to transfer Safarov, nor had he been in a position to. Mesterhazy insisted that Lazar had been “lying” when he told Origo that Orban had “not given any orders” to repatriate Safarov.


Hungarian parliament accused of burying debate on domestic violence

Women’s rights group have accused Hungary’s parliament of trying to skirt genuine debate on the issue of domestic violence by scheduling discussions on the topic for the middle of the night. Lawmakers will hold discussion of domestic violence on Tuesday, but not until 2 a.m. CET. The focus of the discussions will be a citizen-led proposal aimed at creating a specific law to criminalize domestic violence. Most lawmakers say the current laws are adequate.

Hungary’s parliament has often used late-night sessions to debate controversial issues such as taxes on telecommunication services, changes to media law, judges’ retirement and some constitutional issues. Women’s groups in the country say it’s a sign that lawmakers want to avoid visible debate on the issue. When minority green party LMP proposed holding discussions during the day, House Speaker Laszlo Kover said that the issue wasn’t weighty enough to warrant more attention.

An estimated 70 women are killed by their partners every year in Hungary, accounting for about 39% of all manslaughter cases in the country, according to two women’s rights groups. These groups want a separate law to protect women in these cases. “I just simply can’t see the rationale behind this decision. I want them to show me those parts within the criminal code that would cut the number of deaths to the ratio seen in Germany,” said Judit Wirth, a member of NANE Women’s Rights Association.

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