Viktor Orban announces a government reshuffle along with the appointment of a new central bank governor
Hungarian Prime Minister Viktor Orban has announced that a new ministry will take charge of the economy and state finances, as he prepares for the appointment of a new central bank governor to succeed his former ally Gyorgy Matolcsy, who has since become a critic, Reuters reports.
In power since 2010, veteran nationalist Viktor Orban has worked to revitalize Hungary's economy after last year's recession, following an inflation surge to over 25% in the first quarter of 2023, the highest level in the European Union.
Favorite for the Ministry of Finance
Orban and Matolcsy, who has led the National Bank of Hungary since 2013, have blamed each other for the inflation increase, with the central bank strongly criticizing Orban's price and interest rate caps, which the bank said limited its independence.
On Sunday, Orban announced that a senior minister will take over the leadership of his economic recovery plan in 2025, an election year, during which his Fidesz party will seek to strengthen its support after recording its weakest result in a national or European election in almost two decades in the European Parliament elections in June.
Orban stated that the planned government reshuffle is due to the fact that the position of central bank governor will become "unfortunately vacant on March 1st."
The name of the Minister of Finance, Mihaly Varga, has been largely speculated to succeed Matolcsy as the head of the central bank next year, while the Minister of Economy, Marton Nagy, a former central banker, could take over public finances within a consolidated ministry.
"It is clear that whoever takes this position cannot become this senior minister (responsible for the economy and state finances), to be honest. One of them will become the senior minister in charge of the economy, while the other will become the central bank governor," Orban stated in a Facebook post, without naming any of his chosen names.
Prime Minister seeks friendship with everyone
A resurgence of inflation beyond the central bank's target forced the National Bank of Hungary to halt last month the rate easing at the highest level in the EU, at 6.75%, after 15 consecutive cuts totaling 1,125 basis points.
Orban's government has repeatedly pressured the bank for an even more aggressive rate relaxation, while Matolcsy has repeatedly asked Orban to change the course of policy, stating that Hungary lags behind even Central European countries.
Orban also stated that Hungary should maintain fiscal discipline while drafting a budget for 2025 that can boost economic growth to 3% to 5% through large wage increases, higher tax benefits for families with children, and measures to support small businesses.
On the other hand, economic success in Hungary will be brought about by "economic neutrality," Prime Minister Viktor Orbán stated at a local event in Kötcse, Somogy County, as reported by MTI. "In the past period, a new global economy has been created, and we need to adapt to it and a new economic policy is needed. The heart and essence of this economic policy is economic neutrality," Orbán said.
"Our current situation clearly shows that we realized in time that instead of forming blocs, the solution for the Hungarian economy is good relations with all important actors of a unified global economy," stated Viktor Orbán, the only leader in the European Union who maintains close relations with Moscow and Beijing.
The essence of foreign policy lies in building friendships and alliances, said the head of the government in Budapest. The fact that two countries do not have good relations does not prevent Hungary from having good relations with both. It is in Hungary's interest for the global economy not to disintegrate into blocs, the Prime Minister emphasized. Hungary can have good relations with Americans, Chinese, Japanese, Arabs, and the European Union - all at the same time. "We are a sovereign country," Viktor Orbán concluded.