Hungary's Finance Minister plans economic reshuffle

Hungary's new Finance Minster-to-be, Tibor Draskovics has been outlining his priorities this week. He takes office next month - replacing Csaba Laszlo, who was recently dismissed by Hungary's Prime Minister for allowing the budget deficit to spiral out of control. The new finance minister has worked as a banker, tax advisor and spent 16 years in the Finance Ministry - more recently as the head of the prime ministers cabinet. He's pledging to pursue stricter economic policies in a bid to keep Hungary on track to join the euro zone in 2008.

Introducing his package the Finance Minster designate Tibor Draskovics said he gave priority to economic growth over balance. At the same time he announced an amendment to the planned budget deficit. Instead of 3.8 percent as it was laid down in the budget law for this year, the deficit would be 4.6 percent of the GDP. That requires a further 120 billion Forint saving - about 450 million Euros. I asked Peter Akos Bod, economic professor and former national bank governor, whether this could be described as an austerity package.

"Cutting expenditure by 120 billion Forint of course means a negative message for the spending ministries, but the reduction of spending is less than 1 percent of the GDP. A package yes, which aims to reduce the budget deficit. But the deficit will still be more than 5 percent of the National Product and this is still too high. Whether it will be enough for the market we will see. That's why I wouldn't call it an austerity."

How would you interpret his comments with regard to the introduction of Euro, possibly in 2008?

"He did not say that he would postpone the target and he asked for some time - and I think this was a good decision - until late March to see if we can do it. I guess what date it is, whether it's the previous one or perhaps a year later - is less important than to have a fixed date per se, because business executives, bankers, investors, managers should know when they will leave behind the national currency, the Forint, and conduct their operations in the new European currency."

On the whole, are you optimistic towards Hungary's prospects with Mr Draskovics as the Finance Minister Designate?

"He has of course the support of the Prime Minster and that's a plus. But he has no political profile and that's a minus. The important thing will be if he realises the decisions he makes and strictly keeps to them. Then I think he can build a reputation."