Hungarian euro coins
Encyclopedia
Hungary
can replace its currency, the forint
at the earliest on 1 January 2020, according to Viktor Orbán
, the prime minister of the country. There is no target date and the forint is not part of European Exchange Rate Mechanism
(ERM II). An economic study in 2008 has found that the adoption of the euro would increase foreign investment in Hungary by 30%.
introduced austerity measures, causing protests in late 2006 and an economic slow-down in 2007 and 2008. However, in 2007, the deficit had been reduced to less than 5% (from 9.2%) and approached the 3% threshold in 2008. In 2008 analysts claimed that Hungary could join ERM II in 2010 or 2011 and so may adopt the euro in 2013, but more feasibly in 2014. On 8 July 2008, then-Finance Minister János Veres announced the first draft of a euro-adoption plan.
After the 2008 global financial crisis, the likelihood of a fast adoption seemed greater. Hungary got aid from the International Monetary Fund
, the European Union
and the World Bank
. In October 2008 the head of Hungary's largest bank called for a special application to join the eurozone
.
Ferenc Gyurcsány ran out of political capital in March 2009 to accept necessary measures. The EUR/HUF reached 317 on 6 March. Gyurcsány initiated constructive motion confidence against himself 21 March and nominated Minister for Development and economist Gordon Bajnai
. The socialist and liberal parties accepted him to be the new prime minister and have an interim government for a year from 14 April. Bajnai's premiership brought new austerity measures in Hungary. Thus, they may keep the deficit under 4% in 2009 and the 2010 budget calculates with 3,8%. The inflation came near to 3% as a result of the crisis, but because of the risen VAT, it had an average of 5% in the second half of the year. Because of the IMF loan, the public debt risen to near 80%. The central bank's interest rate fell to 6,25% from 10,5% in 2009. The Bajnai government could not lead Hungary to the ERM-II, but it stated it does not plan to do so.
won the 2010 Hungarian parliamentary election
, enough to form a government on its own. The Fidesz was not specific then about its economic priorities. Shortly after the formation of the new government, they announced their intention to keep the 2010 deficit on 3,8%. After more pressure, in September they also accepted to bring it down to 3% in 2011. In 2010, finance minister György Matolcsy
said they will discuss euro adoption in 2012. Mihály Varga
, another member of the party talked about possible euro adoption in 2014 or 2015.
However, in February 2011, Prime Minister Viktor Orbán
made clear that he does not expect the euro to be adopted in Hungary before 2020. Later, Matolcsy also confirmed this statement. Orbán said the country is not ready yet to adopt the currency and they will not discuss the possibility until the public debt reaches a 50% threshold. (The public debt was over 80% then and the government expected to reach its target by 2018.) When the countries of the eurozone
adopted the Euro Plus Pact on 25 March 2011, Hungary decided to go along with the United Kingdom, Sweden and the Czech Republic and choose not to join the pact. Matolcsy said that they could agree with the most of its contents, but did not want to give up the country's independence regarding corporate tax matters.
Hungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
can replace its currency, the forint
Hungarian forint
The forint is the currency of Hungary. It is divided into 100 fillér, although fillér coins are no longer in circulation. The introduction of the forint on 1 August 1946 was a crucial step of the post-WWII stabilization of the Hungarian economy, and the currency remained relatively stable until...
at the earliest on 1 January 2020, according to Viktor Orbán
Viktor Orbán
Viktor Orbán is a Hungarian populist and conservative politician and current Prime Minister of Hungary...
, the prime minister of the country. There is no target date and the forint is not part of European Exchange Rate Mechanism
European Exchange Rate Mechanism
The European Exchange Rate Mechanism, ERM, was a system introduced by the European Community in March 1979, as part of the European Monetary System , to reduce exchange rate variability and achieve monetary stability in Europe, in preparation for Economic and Monetary Union and the introduction of...
(ERM II). An economic study in 2008 has found that the adoption of the euro would increase foreign investment in Hungary by 30%.
Under the socialism governments between 2002 and 2010
Hungary originally planned to adopt the euro as its official currency in 2007 or 2008. Later 1 January 2010 became the target date but that date has been abandoned because of an excessively high budget deficit, inflation, and public debt. For years, Hungary could not meet any of the Maastricht criteria. After the 2006 election, Prime Minister Ferenc GyurcsányFerenc Gyurcsány
Ferenc Gyurcsány is a Hungarian politician. He was the sixth Prime Minister of Hungary from 2004 to 2009.He was nominated to take that position on 25 August 2004 by the Hungarian Socialist Party , after Péter Medgyessy resigned due to a conflict with the Socialist Party's coalition partner...
introduced austerity measures, causing protests in late 2006 and an economic slow-down in 2007 and 2008. However, in 2007, the deficit had been reduced to less than 5% (from 9.2%) and approached the 3% threshold in 2008. In 2008 analysts claimed that Hungary could join ERM II in 2010 or 2011 and so may adopt the euro in 2013, but more feasibly in 2014. On 8 July 2008, then-Finance Minister János Veres announced the first draft of a euro-adoption plan.
After the 2008 global financial crisis, the likelihood of a fast adoption seemed greater. Hungary got aid from the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
, the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. In October 2008 the head of Hungary's largest bank called for a special application to join the eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
.
Ferenc Gyurcsány ran out of political capital in March 2009 to accept necessary measures. The EUR/HUF reached 317 on 6 March. Gyurcsány initiated constructive motion confidence against himself 21 March and nominated Minister for Development and economist Gordon Bajnai
Gordon Bajnai
György Gordon Bajnai was the seventh Prime Minister of Hungary from 2009 to 2010. In March 2009, following Prime Minister Ferenc Gyurcsány's announced resignation, Bajnai was nominated by the ruling MSZP party to become Hungary's next prime minister...
. The socialist and liberal parties accepted him to be the new prime minister and have an interim government for a year from 14 April. Bajnai's premiership brought new austerity measures in Hungary. Thus, they may keep the deficit under 4% in 2009 and the 2010 budget calculates with 3,8%. The inflation came near to 3% as a result of the crisis, but because of the risen VAT, it had an average of 5% in the second half of the year. Because of the IMF loan, the public debt risen to near 80%. The central bank's interest rate fell to 6,25% from 10,5% in 2009. The Bajnai government could not lead Hungary to the ERM-II, but it stated it does not plan to do so.
Under the conservative government from 2010
The centre-right FideszFidesz – Hungarian Civic Union
The Fidesz – Hungarian Civic Union is a major conservative party in Hungary. At the 2010 election in Hungary, Fidesz-KDNP won a two-thirds majority of seats by gaining 52% of the votes, with Fidesz winning 227 seats and KDNP winning 36...
won the 2010 Hungarian parliamentary election
Hungarian parliamentary election, 2010
A parliamentary election was held in Hungary on 11 and 25 April 2010 to choose MPs for the National Assembly. They were the sixth free elections since the end of communist era. The 386 members of parliament were elected in a combined system of party lists and electoral constituencies...
, enough to form a government on its own. The Fidesz was not specific then about its economic priorities. Shortly after the formation of the new government, they announced their intention to keep the 2010 deficit on 3,8%. After more pressure, in September they also accepted to bring it down to 3% in 2011. In 2010, finance minister György Matolcsy
György Matolcsy
György Matolcsy is a Hungarian politician, current Minister of National Economy from 29 May 2010. Matolcsy was also Minister of Economy during the first cabinet of Viktor Orbán.-Career:...
said they will discuss euro adoption in 2012. Mihály Varga
Mihály Varga
Mihály Varga is a Hungarian politician, who served as Minister of Finance between 2001 and 2002. He is member of the Fidesz from the beginnings . He is one of the party's four vice presidents since 2005.-Career:...
, another member of the party talked about possible euro adoption in 2014 or 2015.
However, in February 2011, Prime Minister Viktor Orbán
Viktor Orbán
Viktor Orbán is a Hungarian populist and conservative politician and current Prime Minister of Hungary...
made clear that he does not expect the euro to be adopted in Hungary before 2020. Later, Matolcsy also confirmed this statement. Orbán said the country is not ready yet to adopt the currency and they will not discuss the possibility until the public debt reaches a 50% threshold. (The public debt was over 80% then and the government expected to reach its target by 2018.) When the countries of the eurozone
Eurozone
The eurozone , officially called the euro area, is an economic and monetary union of seventeen European Union member states that have adopted the euro as their common currency and sole legal tender...
adopted the Euro Plus Pact on 25 March 2011, Hungary decided to go along with the United Kingdom, Sweden and the Czech Republic and choose not to join the pact. Matolcsy said that they could agree with the most of its contents, but did not want to give up the country's independence regarding corporate tax matters.