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Last Updated:[25-02-2009 06:39:40 EDT] Zoom in Zoom out Back to Tradenews

EC Praises Hungary’s Economic Policy yet Soft-pedals on Early Adoption of the Euro



tradenews The European Commission’s President Jose Manuel Barroso commended the Prime Minister of Hungary, Ferenc Gyurcsany while he received him in Brussels, the headquarters of the EU for his government’s policies to tide over the economic crisis. Barroso has praised Hungary on account of the assessment by the EC for taking appropriate measures to tackle its high budget plans and foreign debt.

Barroso assured Gyurcsany, in the wake of the positive assessment, that the second tranche of the EU's €6.5bn would be disbursed not later than this March end. Last year EU had released €2bn as an initial emergency relief loan. He further expressed satisfaction over Gyurcsany’s guarantee to continue reforms and stay on the path of macroeconomic stability.

Nonetheless, the EU with assistance from the International Monetary Fund and the World Bank had pledged €20bn to Hungary in late last year, but global financial crisis had forced them to reduce the amount to €6.5bn. According to Ecostat, an institute for strategic research of economy and society of Hungary, the country is bound to lose 105,000 jobs in 2009, of which 60 percent would be the fallout of lower demand of its exports. Therefore, Hungary will have to spend the second tranche of the loan judiciously to avoid destabilizing unemployment issues.

The Hungarian prime minister brought forth in the meeting to speed up the process of acceding to the Euro zone which he saw as a complementary measure to overcome the crisis. He requested to relax the current period of 2 years where a country's currency is allowed to trade 15 percent around a fixed party rate to the euro. But Barroso played down the suggestion by saying that to fulfill the convergence criteria of the Economic and Monetary Union is mainly the responsibility of the aspiring nation, however, he added that he wished to see Hungary to adopt the euro line soon.

By Jose Roy




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