Hungary will only consider joining the eurozone when the country’s GDP reaches 90 per cent of that of the euro-using countries, Prime Minister Viktor Orbán said at an annual meeting of ambassadors in Budapest on Tuesday. National GDP is currently at 34 per cent, so Orbán was probably safe in saying this would not be an issue for at least a decade.
Though he did not say so specifically, GDP comparisons are usually based on purchasing power parity. The situation in this case is better: the Hungarian GDP is 60 per cent of the eurozone average, but the estimate of a decade still applies.
“Hungary has a vested interest in seeing the success of the eurozone, as we are linked to the bloc in many ways,” Orbán said, adding that a successful eurozone will significantly increase the chances of a successful Hungarian economy. “The European Union would not see economic growth without Central Europe. A deeper institutional and eco-political integration of the eurozone will take place over the next few years.”
We were able to react to crisis
According to the Prime Minister, Hungary, however, will pursue a policy of balance and does not approve of national competences being converted “on the sly” into community-level competences in the EU. “An unclear relationship in national and community competences only favours large states and leads to double standards.”
He said that at a time of financial crisis, targeted measures produce better results, without which it will be impossible to exit the crisis. “Yet Hungary’s targeted measures, such as the banking and telecommunications taxes, are constantly criticised, despite the country having been able to reverse negative trends and reduce state debt.”
May repay IMF loan early
Regarding Hungary’s International Monetary Fund loan, Orbán said the country’s position could improve even further if it chooses early repayment. “The budget deficit is below three per cent for the third year, the country stands on its own feet, the government has dealt with the problems of foreign-currency borrowers, unemployment is on the decline as well as household utility bills, while wages and pensions are increasing and the economy is growing,” he said. The IMF was told on Monday to pack up its office in Budapest by the end of the summer.
Plus he expects great economic growth data in the last quarter of this year.
On relations with Russia, Orbán said the EU must reach an agreement with the country to improve its competitiveness. “For Central Europe this is historically a complex issue. The region must clearly define its interests in the context of a long-term EU-Russia strategic agreement, in case such an agreement comes about.”
The Prime Minister emphasised that because the EU is part of a transatlantic community, it must strike a balance between a strategic pact with Russia and a free trade agreement with the United States. As for the latter, a government committee had been formed to establish how such an agreement would affect the various sectors of the Hungarian economy.
“Although on issues such as military cooperation, secret-service cooperation and economic relations, the situation with the United States is outstanding, there are differences of opinion on ideology,” he said. “America must accept that freely elected representatives of the Hungarian people make decisions freely about what is good for them and what is not.”