Dániel Palotai, managing director and chief economist of the Hungarian National Bank (MNB), will be the first Hungarian to join the board of the International Monetary Fund (IMF) from Nov. 1, news portal Index reports.
Palotai will be the representative of the Central and Eastern European group of countries (Turkey, Austria, Hungary, the Czech Republic, Slovakia, Belarus, Slovenia and Kosovo) on the 24-member board which he hopes will lead to favorable results for the region.
“I primarily consider it my task to effectively represent domestic interests and to develop a more realistic, deeper and more positive image of Hungary,” Palotai told Index.
As the board decides not only on the internal affairs of the IMF, but also on issues affecting all 190 member countries, the position of executive director can be considered not only an economic-financial task but also a diplomatic task.
Asked whether the previous poor relationship between the IMF and Hungary could improve with the inclusion of a Hungarian in the board, Palotai reminded that the Hungarian government was expected to implement austerity measures in exchange for the IMF loan requested in autumn 2008, while public debt exceeded 80 percent of GDP and the domestic economy was in a difficult situation.
For this reason, the Orbán government rejected the IMF program in 2010 and instead developed the Kálmán Széll plan, which, among other things, reduced the debt burden with proportionate, flat-rate income tax and shifted it to higher-capacity sectors instead of levying additional taxes on the population.
“Today, Hungary’s relationship with the IMF is much better than it was ten years ago, as they also saw at the IMF that their previous program, which was mainly based on austerity, was not right. Indeed, austerity-based programs cannot be a success, as they only deepen the crisis and thus worsen the budget balance,” Palotai said.
He added that it was particularly important in the current epidemic situation that the IMF had already provided favorable loans to more than 80 countries, albeit in the short term, but much faster than before and without the usual conditions.
Palotai earned his Master’s degree in 2004 at the Faculty of Economics of the Corvinus University of Budapest. He began his professional career at the MNB, later the European Central Bank, and the Ministry for National Economy, where he was actively involved in the development of Hungary’s Structural Reform Program.
In March 2013, Dániel Palotai rejoined the MNB as executive director and the bank’s chief economist. Since 2016, he is the chairman of the Financial and Economic Review’s (FER) editorial board, since 2017 he is also the vice president of Hungarian Economic Association (HEA), a member of the Monetary Policy Committee (MPC) of the European Central Bank, and a member of the Economic and Financial Committee (EFC) of the European Union.
Title image: Hungarian economist Dániel Palotai, freshly appointed member of the IMF board. (MTI/Lajos Soós)