Address by
the Ambassador of Hungary
26-09-2006 Trinity College
Mr. Chairman, Ladies and Gentlemen!
First of all let me join you,
Mr. Chairman in congratulating Duolog Company and its Chief
Executive Officer, Mr. Ray Bulger in winning this year
Annual Award of the Irish Hungarian Business Association. I
am absolutely sure that this award goes to the right recipient.
In the past 6-7 years Duolog Company has developed from
a moderate national business company into a large international
company. Congratulations on the well deserved Award.
Normally I would have finished
my contribution with these words, because as you can see
in the programme I have got only 2-3 minutes, but I feel
I have to say a few words about the recent situation in
Hungary – with
your permission Mr. Chairman.
Thanks to a very effective
international media, everybody knows the news from my country. As
we know good news is no news, only bad news is news, so
I am not surprised that only the negative and bad news
has come out.
The fact is, that PM Mr Ferenc
Gyurcsány has
acknowledged that the political elite (including himself
and his party leaders) in Hungary in
the past years has lied to get and to keep the power. But
right after the re-election of his Government early this
year – according to a leaked recording from a closed
door party meeting – Mr Gyurcsány called upon
his party members and the whole political elite to abandon
this practice and to unveil the true economic and financial
situation of the country. The Government has worked out a
new Convergence Programme, and according to the latest information
Bruxelles will accept it today.
- The government now hopes to limit the 2006 budget deficit
to 10 per cent of the GDP, and reduce it to 3% within 3 years.
In order to achieve this goal the Government has announced
major spending and employment cuts - as well as new and higher
taxes and visit fees for health services (less than 2 Euros),
contribution to the fees for the 3rd level education etc...
- Many voters are aware that the
public finances are bad and they are ready – but not happy – to
accept the necessity of a programme of painful fiscal adjustments
aimed at stabilising the budget at around 3%.
- But the admission of lies enraged
a part of the society and they now want the resignation
of the prime minister and his Government preferring a new
election. Altogether about 0,5 % of the total population
of Hungary has been participating in peaceful protests
in different Hungarian cities, mainly in Budapest. In the
first day of the demonstration a very violent, so-called
Euro conform football hooligan group occupied the National
TV station. The Police was not prepared for this type of
disturbance and was not able to protect the broadcasting
headquarters. It was very similar to what has happened
here in Dublin in the O’Connell Street early
this year during the ‘Love Ulster’ march. But
from the second day of the protest the police were masters
of the situation.
- Mr Gyurcsány – having
the strong support from the coalition parties - insists
he will stay in power to push through tough cost-cutting
reforms and slash Hungary's huge budget deficit. The government
won't alter its political composition or the policy of
reforms and corrections. The outcome of the local elections
on 1st October won't affect this policy. The parliamentary
elections were held in April this year with the outcome
of a significant victory of the governing coalition parties
(the Socialist Party and the Free Democrats).
- I would like to strongly emphasise that the state budget
deficit is a budgetary problem, and not the sign of weak
economic performance. The budget deficit is the consequence
of excess spending mostly for accelerated infrastructure
investments (like motorways), accumulating burden from non-reformed
social insurance related policies and electioneering.
- In contrary to the sad budget deficit,
the economy is growing. The increase of GDP for the first
half of this year is 4%, the productive and service sector
has grown by 12%, export has increased by more than 10%
- the bilateral trade between Ireland and Hungary by 50%! The „only” serious
problem is the very excessive budget deficit.
- Recent political developments in
Hungary have had a rather limited impact on Hungarian financial
market. The exchange rate is fluctuating between 250 and
280 HUF to EUR). Political uncertainty and demonstrations
themselves have not shifted investor’s confidence
significantly. This confidence probably will not change,
as long as fiscal consolidation and structural reforms
are implemented as needed.
- The Hungarian private sector, the productive sphere and
service economy are healthy and growing.
- The present situation in Hungary
is a kind of reflection of the fact, that it is difficult
for the EU's newest member states to put in place quickly
all the policies required for full coherence and economic
integration to old EU member states. In some respects it
is similar to the situation in Ireland in the middle of
80’s that has been solved
through social and economic partnership and resulted in „Celtic
tiger” in 10 years.
- We hope that we can accomplish
similar results in a shorter time utilising Irish experiences
too, and Hungary can be called soon as the “Pannon
Puma”
Mr. Chairman, Ladies and Gentlemen,
Concluding my short remarks, I would like to assure you that
you have chosen the right country to deal with. I am absolutely
sure, that the political climate will cool down, and the parliamentary
parties will go back inside the walls of the Parliament and
will find a peaceful and mutually acceptable solution for their
dispute.
Thank you Mr. Chairman.
Budget
deficit: 10%
Net
foreign Debt: 31 billion EUR
Gross debt: 60% of the GDP (Ireland
had two times higher 20 years ago)
Export above
50 billion EUR
Industrial
production:12.9%
Inflation:
4%
Bilateral
trade 50-60% increase in 2006
Fixed
capital formation 7 –8%
Wages: Private
9% grothw Public 5% grothw
Unemployment
rate: 7-7.5 |
