In the report published earlier today of the post-programme surveillance of the utilization of the IMF-EU loan package launched in 2008, the European Commission (EC) proposed to end the post-surveillance mission.

As more than 70 percent of debt owed to the European Commission has already been repaid, the end of the process is now in sight as the recommendation has also been endorsed by member states. The European Commission paid the last official visit to Hungary last year, following regular visits since 2010.

The document states that the country does not need close monitoring any more, as Hungary has by November 2014 repaid more than 70 percent of the loan drawn from the credit facility. The EC report also points out that budget finances are stable and the country has weathered the effects of market turbulences. The high level of fiscal liquidity and forex reserves provides a sufficient buffer in case of potential turmoil on international financial markets.

The European Commission also emphasises that Hungary’s economy saw robust growth in 2014, which in the Commission’s opinion was partly the result of one-off factors, but besides these the macroeconomic basis has also improved. Accordingly, the Commission predicts that due to structural reforms implemented over the past years the potential pace of economic growth is set to accelerate. The study also recognizes that employment has reached a pre-crisis level and the current account has posted steady surpluses.

The report also mentions that the Government of Hungary has kept fiscal deficit below 3 percent in past years and the country has exited the EDP. As a positive phenomenon, the Commission points out that the historic pattern of Hungarian electoral cycles, with runaway deficits in election years, has been ameliorated: in spite of the three elections held in 2014 the fiscal deficit was still kept below 3 percent of GDP.

(Ministry for National Economy)