Hungary left to provide CEE colour in 2012 finance minister ranking

By bne IntelliNews November 23, 2012

bne -

Central Europe's finance ministers made no spectacular movements in the Financial Times' 2012 ranking of the fiscal managers of the EU's 19 largest economies.

Only one managed to move more than one place from last year's position; unfortunately, that movement was in the wrong direction. It's been a tough year both in terms of both economics and politics for the Czech Republic's Miroslav Kalousek. However, his fall from eighth place in the 2011 ranking to 11th this year may have been worse if he'd had his way and pressed even harder on the austerity pedal. As it is, his insistence on continued fiscal consolidation is now widely blamed for sending the country into recession this year, and his loyalty to PM Petr Necas has now been rewarded with an announcement that the cutbacks and tax rises now must stop.

In fact every finance minister in the CEE region moved down the table - which was led by Germany's Wolfgang Schauble, who swapped places from last year with runner-up Anders Borg from Sweden - apart from Poland's Jacek Rostowski, who remained third.

Despite being aided by the Polish economy's resistance - until the second half of the year anyway - yet again to the worst of a crisis, as the FT points out, Rostowski has recently "managed to strike a balance between fiscal consolidation and nurturing fragile economic growth."

The panel of judges also appreciates the credibility he has helped install, with the FT noting that "the country is well regarded by financial markets." Despite the fact that Poland's low borrowing costs has more to do with figures in the US Fed and ECB, the country's leverage of the situation is also praised. "It has met this year's borrowing needs and is making a start on borrowing for 2013, all at record low interest rates," the paper notes.

The only debutant from the region, Peter Kazimir of Slovakia, comes in one place below his predecessor at seventh, despite being "part of Slovakia's new left-wing government," the ranking notes acerbically. While praising him for committing to ambitious fiscal targets, and marking him first in the economic category thanks to Slovakia's better-than-expected growth through 2012 presumably - the FT appears to know little about his methods. Despite its claim, spending cuts have not been a significant feature of his fiscal policy thus far. No wonder then that the paper prefers instead to note that, unlike the finance minister in the last Smer government, he doesn't ride a motorbike.

As so often however, its left to Hungary to add the real colour. With the country in recession, the banks furious and keeping their purses closed, several vicious fights with the IMF and EU from whom the country says it is trying to borrow €15bn, Gyorgy Matolcsy - credited as the architect of the Orban administration's "unorthodox" economic policy - finally managed to shift himself out of 17th place, where he has sat for the past two years (and his predecessor before him for a year).

However, the "cumbersome" institutional set-up in Spain - on top of the obvious issues with the economy and banks in the Eurozone country - means that Matolcsy is just kept off the bottom, despite his failures.

"More than most counterparts, the 57-year-old economist and former country director at the European Bank for Reconstruction and Development struggles to reconcile how he presents Hungary's economy with how outsiders perceive it," the FTexplains of the jury's decision to stick Matolcsy in 18th place. "The self-proclaimed optimist, a loyalist to the centre-right prime minister Viktor Orban, is the face of "unconventional" policies such as a hefty levy and other measures that have irked banks and crisis taxes on some industries. Gyorgy Matolcsy says they have reduced debt and the deficit and made Hungary's economy a "success story".

"Investors and analysts beg to differ," the newspaper points out, "and see weak investment, a recession and foreign banks pulling money out faster than from the country's neighbours. Undaunted, he used a newspaper column this month to hit out at bankers and hedge fund managers as "pirates of the money world" who, he alleged, profited from spreading bad news and keeping Hungarian bond yields high."

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