EU-DIGEST

Hungary unexpectedly lowers interest rates - by Polya Lesova

Hungary's central bank unexpectedly cut its benchmark interest rate on Monday, saying that economic growth and inflation may be both sharply lower than expected. Earlier this month, the International Monetary Fund approved a $15.7 billion loan for Hungary aimed at restoring confidence in its financial markets. The IMF loan is part of a $25 billion financing package to which the European Union has committed $8.4 billion and the World Bank $1.3 billion.
"The crisis hitting the international financial system has caused a fundamental change in the path of the Hungarian economy in recent months," the central bank said in a statement Monday.

Labels: Economy, EU, Hungary

Hungary: Central bank makes emergency rate hike

Hungary's central bank Wednesday made a steep emergency interest rate hike to stabilize the country's currency, hurt by the financial crisis, raising the possibility that other countries in the region could follow its lead. The National Bank of Hungary's Monetary Council raised the base rate to 11.5 percent from 8.5 percent. The base rate is the interest paid by the central bank to commercial banks using its two-week bill facility, the main instrument used by the National Bank of Hungary to manage liquidity on the interbank market. The move is meant to protect the national currency, the forint, which has fallen 16 percent against the euro since the start of October, according to Neil Shearing of Capital Economics.

Labels: Economy, EU, Hungary

Hungary central bank ups base rate, monetary conditions to stay strict

Hungary central bank ups base rate, monetary conditions to stay strict

Hungary's central bank raised the base rate on Monday and said it would maintain a strict monetary policy in the face of inflationary risks, leaving the door open for another hike. The bank increased the base rate 25 basis points to 8.5 percent in a move anticipated by markets. The bank has now increased interest rates 1 percentage points over the last three months.

Labels: Economy, EU, Hungary

Hungary trashed in global competitiveness report

The Swiss IMD business school has published its annual World Competitiveness Yearbook for 2008, slamming Hungary for its permanently poor economic performance, Napi Gazdaság reports. The survey compared 55 economies and bumped Hungary down three spots to 38th this year. While Hungary's competitiveness suffered a setback in the past year, most of its regional rivals climbed higher up the chart. Slovakia, for instance, which was only one notch above Hungary last year, widened its lead to eight spots in 2008 and is now ranked 30th. Meanwhile, the Czechs also moved up four places to 28th, while Slovenia accelerated past Hungary from 40th to 32th. Even Poland, which lags behind Hungary, managed to climb eight spots to 44th.

Labels: competitiveness, EU, Hungary

Sweden/Germany/Hungary: Scholars run down more clues to a Holocaust mystery - by Arthur Max and Randy Herschaft

Sweden - Budapest, November 1944: Another German train has loaded its cargo of Jews bound for Auschwitz. A young Swedish diplomat pushes past the SS guard and scrambles onto the roof of a cattle car.Ignoring shots fired over his head, he reaches through the open door to outstretched hands, passing out dozens of bogus "passports" that extended Sweden's protection to the bearers. He orders everyone with a document off the train and into his caravan of vehicles. The guards look on, dumbfounded. Raoul Wallenberg was a minor official of a neutral country, with an unimposing appearance and gentle manner. Recruited and financed by the U.S., he was sent into Hungary to save Jews. He bullied, bluffed and bribed powerful Nazis to prevent the deportation of 20,000 Hungarian Jews to concentration camps, and averted the massacre of 70,000 more people in Budapest's ghetto by threatening to have the Nazi commander hanged as a war criminal.

Wallenberg's rescue mission inevitably placed him in a vortex of intrigue and espionage involving the Hungarian resistance, the Jewish underground, communists working for the Soviets, and British, U.S. and Swedish intelligence operations. He also had regular contact with Adolf Eichmann and other Nazis running the deportation of Jews.After the Red Army arrived in January, Wallenberg went to see the Russian military commander to discuss postwar reconstruction and restitution of Jewish property. Two days later he returned under Russian escort to collect some personal effects, then was never seen in public again. And what did his country — or his influential cousins — do about it? In the mid-1950s, the Swedes pursued the case more aggressively, prompting a memorandum from Soviet Foreign Minister Andrei Gromyko in 1957 that Wallenberg had died of heart failure in detention 10 years earlier — at age 34. As more testimony came in that Wallenberg was still alive, Stockholm periodically raised the issue with Moscow — but without results, said Magnusson, interviewed in the Netherlands where he is now ambassador.

Labels: EU, Holocaust, Hungary, Raoul Wallenberg, Sweden

Length of German-backed companies' complaint list grows in Hungary

Hungary lost most of its appeal as an investment target among those 20 countries that the German-Hungarian Chamber of Industry and Trade (DUIHK) put the spotlight on in its annual survey. The tolerance of companies are put to the test by uncertainties surrounding both Hungary's economic policy framework conditions and the developments in the business environment, as well as the government's constant backing away from the heralded and also necessary tax reform. All these not only carry the risk of diminished investment appetite from the part of the companies, but also create a long-term negative implication of the country becoming an unwanted target in the eye of the rest of the world.

Labels: Economy, EU, Hungary

Serbia pulls envoys from Hungary, Croatia, Bulgaria

Serbia is withdrawing its ambassadors from Hungary, Croatia and Bulgaria in response to their recognition of Kosovo as an independent state.
The three neighbors on Wednesday dealt a blow to the Serb campaign to overturn Kosovo's month-old independence by announcing they would establish ties with the new republic. “Following official notification the Foreign Ministry has given orders to the ambassadors in Croatia and Hungary to leave their posts,” said ministry spokeswoman Vesna Sekerezovic. “The ambassadors have 48 hours to return to Serbia.”

Labels: Croatia, EU, Hungary, Serbia

EU tells UK to cut deficit faster, warns Germany about next year

he European Commission told the UK to step up the pace of deficit reduction and warned that Germany looks set to slip back into deficit next year. Publishing its latest assessment of several EU member states' public finances, the commission also said Hungary is 'broadly' on track to correct its deficit by 2009. It took a particularly stern line with the UK. 'The pace of fiscal consolidation in the United Kingdom appears insufficient and should be strengthened significantly,' it said. By contrast, the commission noted that 'Germany has achieved a remarkable budgetary consolidation', reaching budget balance this year.

Labels: Britain, Economy, EU, Germany, Hungary