Hungary's central bank to hand HUF50bn to budget

By bne IntelliNews May 5, 2016

The Magyar Nemzeti Bank (MNB) will pay a HUF50bn (€159.8mn) dividend from its 2015 profit to the Hungarian budget, Governor Gyorgy Matolcsy said on May 5.

The announcement came as a surprise, as the central bank had said in February that the full HUF95bn record profit posted last year would be added to its reserves. The sudden change of course appears likely connected to the mounting pressure on Matolcsy, whose resignation the opposition has demanded due to an ongoing scandal over the MNB's use of public money.

The decision to pay the dividend was made by the MNB’s board on April 27, Magyar Nemzet claims. According to the MNB, the payout will reduce Hungary’s state debt by 0.15% of GDP. The central bank pointed out that it last paid a dividend to the budget in 2002. Matolcsy did not take up the reins at the head of the MNB from Andras Simor - a bitter enemy of the ruling Fidesz party, for whom Matolcsy was finance minister - until 2013.

In 2014, the MNB used its profits to launch six charitable foundations, granting them HUF245bn (€790mn) in funds. However, following a Constitutional Court ruling that blocked the government's attempts to remove the foundations’ spending from public scrutiny, it was revealed that they spent around HUF20bn without announcing public procurements, granting a significant amount of funds to people close to Matolcsy. 

On May 5, the MNB said in a press release that the six charitable foundations invested a total of HUF3.2bn at NHB Bank, which is owned by Matolcsy’s cousin Tamas Szemerey. It was earlier reported that Matolcsy made direct investment decisions at one of the central bank's charitable foundations, despite claims that all six are independent bodies, meaning the funds handed to them lose their designation as public.

 

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