In the Concluding Statement 2017 Article IV Mission published earlier today, the delegation of the International Monetary Fund (IMF) recognizes robust economic growth in recent years and favourable fiscal trends as economic policy successes. The IMF delegation – in accordance with Article IV of the IMF's Articles of Agreement – held consultations on 23 February – 8 March 2017 in Budapest. As usual, at the end of this visit the delegation issued a staff report of findings, the Concluding Statement.

In the opinion of the IMF, the medium-term outlook is positive and may lead to employment and economic growth in 2017. The IMF praised the change in Hungary’s government budget- and government debt-to-GDP ratios and tax reform results: the further increase of economic transparency and more efficient tax collection as well as the narrowing of the tax wedge. The report warns that wage and commodity price increases may lead to muted inflationary pressures. Analysts also welcome the significant decrease of the bank tax and they conclude that Hungary’s banking sector is sound, and lending has picked up. With regard to public work schemes, the IMF advises the Government to build upon results achieved hitherto: the skills and productivity of participants should be further improved through the development of training programmes and thus assist their transition to the primary labour market.

As the report stresses, the current state of the Hungarian economy facilitates – beyond achievements in fiscal consolidation and the improvement of investor confidence -- the concurrent establishment of prudent and pro-growth public finances and the further reduction of government debt through structural reforms. The combined effect of these factors may bolster the country’s resilience to external shocks and build the foundations for long-term growth.

The report underscores that maintaining the trust of investors requires a stable and predictable economic policy. It also regards the Hungarian Government’s dual objective of achieving sustainable economic growth and raising the medium-term growth potential to be attainable, provided adequate pro-competitiveness measures are introduced. The IMF staff report concludes that, in line with Government projections, productivity can be improved by structural reforms, the effective utilization of EU funds and increasing labour activity.

(Ministry for National Economy)