Hungarian economy needs another boost, says Central Bank's Matolcsy

The Hungarian economy needs another boost in order to catch up with the more developed European countries, Central Bank Governor György Matolcsy said in an interview with financial news portal Növekedés.hu.

After its successful budgetary and monetary turn, the Hungarian economy now needs a marked improvement in competitiveness, Matolcsy said in the interview. The 63-year-old economist has just been appointed head of the Central Bank for a second six-year term.

He said one of the major accomplishments of the 2014 tax reform was that between 2014 and 2016 the state's tax revenues rose by HUF 700 billion (US$2.5 bln) without actually increasing taxes. He also said the conservative government that took over in 2010 was the first to have successfully and sustainably reduced the budget deficit to under three percent of GDP.

He said the central bank's recently published 330-point proposal to boost competitiveness could have crucial elements to help Hungary to "break out of the trap of moderately developed economies", a feat few countries have been able to achieve in the past 100 years.

He said in order for Hungary to catch up with the developed countries faster, it would need an additional two percentage points of GDP growth on top of the already significant five percent achieved last year.

He said there will also be cheaper banking costs and loan terms, state subsidies for domestic companies wishing to invest abroad and a reduction of the flat income tax from the current 15 to 9 percent.

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