Statement by IMF First Deputy Managing Director John Lipsky at the Conclusion of his Visit to HungaryPress Release No. 07/113
June 5, 2007
Mr. John Lipsky, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Budapest:
"I would like to thank Prime Minister Gyurcsány, Minister Veres and Governor Simor for a productive and constructive dialog on Hungary's economic performance and prospects.
"The favorable international economic and financial environment, and especially the strengthening European expansion, create a moment of unusual opportunity for Hungary to secure new advances toward sustained strong growth and structural improvement.
"The recent tangible progress in reducing the fiscal deficit has provided a crucial foundation for new progress. The notable effort to date has boosted confidence that the economy is headed in a positive direction, and it has been an essential element underpinning the financial market's improved attitudes regarding Hungary's future. Looking forward, the priority policy challenge is to further reduce domestic and external vulnerabilities and to ensure a strong recovery following the current adjustment process.
"The authorities recognize that the fiscal deficit is still unacceptably high. While fiscal consolidation is on track for 2007 and 2008— indeed, the deficit will likely outperform the existing targets—the task ahead remains a formidable one. In other words, a new generation of budgetary and structural improvements will be required in order to keep the economy advancing as intended in 2009 and beyond.
"The essential challenge is to put the economy on a high-growth, high-productivity path. Despite vibrant exports, Hungary's overall growth relative to the rest of Europe has deteriorated over the past few years, and this divergence has been widening recently. Realizing the potential gains from European integration will require sound public finances, improved prospects for private initiatives and the wise use of European Union funds.
"With the government committed to the right policy framework and policies, I am confident that Hungary's economic outlook will be a bright one."