Minister for National Economy Mihály Varga received in his office the delegation of the European Bank for Reconstruction and Development. At the meeting, the parties discussed the implementation of the Memorandum of Understanding (MoU) concluded in February this year and the EBRD’s upcoming Country Strategy Update on Hungary.

On 9 February 2015, Hungary concluded a MoU with the EBRD, in order to bolster the country’s financial system and facilitate bank sector consolidation. Under the agreement, the Government committed itself to gradually and significantly reduce the bank tax as of 2016 and pledged not to introduce any new regulation that might harm banks’ interests but consult with sector representatives prior to the introduction of any planned new regulation. The EBRD considers the MoU to be a major progressive step that contributes to bank sector consolidation. Following the signing of the document, the provision on “bolstering the flexibility and lending capacity of the bank sector” was added to the EBRD’s country-specific recommendations for Hungary in the period 2015-2019.

Mihály Varga informed the delegation that the National Assembly has decided to reduce the bank tax rate and amend the method of calculating the relevant tax base as part of the tax amendment package adopted concurrently with the 2016 Budget. The Government is expecting that lower bank taxes will contribute to the more efficient operation of the financial sector and boost lending, a key economic growth factor, the Minister stressed.

The EBRD’s Country Strategy Update on Hungary for 2015-2019 is currently being drafted. The Government is anticipating that the EBRD – similarly to other international organizations, such as the EC, IMF and OECD – will recognize the country’s latest economic achievements in its report.

In the coming years, in Hungary the EBRD would place special emphasis on reinforcing the capacities of domestic enterprises and developing the public transport projects of local governments besides improving bank sector flexibility and strengthening lending capacities.

The EBRD was founded in 1991 and Hungary has been a member ever since. In the almost 25 years of operation, the Bank has been assisting the transition process of emerging countries toward becoming open and market-oriented economies, while it has also focused on encouraging multi-party democracy and market economy. Accordingly, the Bank aims to contribute mainly to the creation of an up-to-date institutional network, public administration and competitive sectors as well as of a fair and effective taxation system.

(Ministry for National Economy)