Matolcsy proposes some modesty and self-criticism to IMF

Hungary's Economy Ministry has called on the International Monetary Fund (IMF) to practice self-criticism for its failure to predict the global economic and financial crisis and recognize that Hungary's 2010 budget was based on falsified data. The reproach comes on the heels of the IMF's Staff Report, in which the Fund heavily criticised Hungary for a number of measures. The Economy Ministry effectively said that "the credibility of a series of politicians, international financial organisations and credit rating agencies was questioned after 2008 for their failure to uncover the deficiencies of global financial regulations and to forecast the financial crisis in time." It said the IMF was one of these, adding that "some modesty" from its part would be advisable for the Fund failed to recognise in the second half of 2009 that Hungary's 2010 budget was based on "bogus numbers" and that the revenue side was overplanned and the spending side was underplanned. "Based on all this we, as shareholders in the IMF, expect (the Fund) to practice self-criticism with regard to the 2010 budget," the ministry said in a statement.

The ministry does not like either how the IMF interprets the changes implemented in the pension system nor to see how the IMF interpreted the change in the Fiscal Council and the oncoming change in the Monetary Council.  "The role of independent institutions in economic policy making and assessment (such as constitutional court, central bank, and fiscal council) is being curtailed," the IMF staff said.  "The Fiscal Council is being replaced by a consultative body consisting of the chairman of the State Audit Office, the MNB governor, and a presidential appointee, without support staff. Unlike the present Council, which immediately assessed the macroeconomic and fiscal impact of all government initiatives, the new body's role will be limited to commenting on the draft budget once a year." The ministry claims, however, that the new Fiscal Council "is granted unprecedentedly extensive rights by ensuring it an advance credibility probe of the budget (draft)."

The only point on which the ministry agrees with the IMF is that the country needs structural reforms in order to create medium-term financial stability by 2013-14. "This is what the Hungarian government's stability programme, to be announced at the end of February, is aiming at."

Last Updated on Friday, 30 August 2013 09:11