The degrading fiscal situation in which Europe has found itself, along with an “incorrect” mix of domestic Hungarian policies has led to this dead-end, Vértes explains. Fiscal loosening and a notable lack of structural reforms have failed to reassure investors and strengthen the Hungarian economy. He adds that the lack of certainty or predictability in financial policy has led to a loss of credibility in the government, and disappointing GDP figures. And while Hungary would benefit from a quick agreement with the International Monetary Fund (IMF), he says attaining one will be difficult.
To tackle the immense problems Hungary faces, Vértes says considerable reform is necessary. The new reform, requiring fresh tools and targets, will have to be a comprehensive turn in policy for the Hungarian government. Legal consistency and predictability of state action will be crucial to allowing the market to recover, namely in the Constitutional Court, Budgetary Committee, Hungarian National Bank, and Court of Auditors, but also in media regulations and courts decisions. And in addition to gaining back credibility, financial sustainability and economic growth need to become top priorities. Such a shift, Vértes argues, should be the result of political discourse and negotiation, accompanied by significant structural reforms and tax code clarification.
Further integration into Europe will likely be a part of this process, and Hungary will have to exchange reductions in sovereignty for stability and economic development, says Vértes. The current market uncertainty must be alleviated, something only possible with professionally executed reform and considerable organizational changes. When it comes to policy, Hungarians must begin to “do what we say, and say what we do.”
