Governor of the National Bank of Hungary (NBH) Gyorgy Matolcsy is pressing for major institutional changes within the structure and operations of the government as a new global economic crisis is increasingly likely.

In an article in the Magyar Nemzet daily, Matolcsy said that despite Hungary’s achievements between 2010 and 2019, the level of development at the end of 2019 undershot the all-time high from 1936. Indeed, the country’s development level at that time was around 83% of the EU average, whilst in 2019 it was at 73%.

The governor predominantly attributed this to state operations, specifically the government. “Our mediocre economic performance compared with that of our competitors this past decade was the result of a mediocre performance of government”.

Matolcsy went on to praise the economy ministry’s operations between 2010 and 2013, stating it has effectively revamped the state budget and bolstered employment. Nevertheless, he added it was an error to close down the ministry as the centre of Hungary’s economic policy making and assign it to the new finance ministry.

“This broke with the civil political wing’s leading principle that economic policy cannot be guided by annual budget interests. This is akin to the nationally-minded wing giving up the idea of the nation, Christianity or the family on the political stage”.

Matolcsy added that this change has created an “economic policy vacuum”, which the Prime Minister and economic general council has tried to fill.

“This attempt has failed. The National Bank of Hungary was unable to fill the economic policy void from the outside, and there was no institution within the government that was authorised or able to do so on the inside, either”, he stated.

However, the bank governor said the NBH and the country’s financial system has successfully managed the pandemic-fuelled economic crisis. The foreign ministry “has functioned excellently” in handling foreign capital inflows, whilst the innovation and technology ministry has performed well in creating growth conditions.