{ "title": "IMF Executive Board Concludes 2022 Article IV Consultation with Hungary", "publication": "IMF News, February 3, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation", "canonical": "https://www.imf.org/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation", "overlayPath": "/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/index.md", "summary": "IMF Executive Board Concludes 2022 Article IV Consultation with Hungary", "publishDate": "2023-02-03", "sections": [ { "heading": "Overview", "content": "- Date of conclusion: February 1, 2023.\n- Key shocks and developments:\n - Russia’s war in Ukraine contributed to widened economic imbalances.\n - Loose fiscal policy in late 2021-early 2022 intensified inflation.\n - Inflation noted as \"among the highest in Europe at 24.5 percent y/y.\"\n - Current account deficit widened.\n - Monetary policy \"significantly tightened.\"\n - Government plans a \"large fiscal adjustment in 2023.\"\n - Growth in 2022 was strong, led by buoyant domestic demand and a tight labor market.\n - Growth is expected to \"slow considerably in 2023 as domestic and external demand wane.\"\n - Inflation is expected to \"remain elevated but decelerating, as global energy and commodity price pressures ease.\"\n - \"Uncertainty remains high, and sizeable risks could significantly worsen the outlook.\"" }, { "heading": "Executive Board Assessment and Policy Recommendations", "content": "- Overall assessment:\n - Hungary faces high inflation, slowing growth, and large economic imbalances after a robust recovery from COVID-19.\n - Given elevated downside risks, a \"tight and consistent policy mix is needed to reduce economic imbalances and vulnerabilities.\"\n - Structural reforms recommended to sustain medium-term growth, strengthen energy security, and unlock EU funds for digital and green transitions.\n- Fiscal policy:\n - Directors supported the government's planned \"front-loaded fiscal tightening.\"\n - Fiscal tightening seen as complementary to monetary policy to fight inflation, rebuild buffers, and safeguard fiscal sustainability.\n - Emphasis on \"growth-friendly fiscal adjustments by prioritizing productivity-enhancing expenditures\" and avoiding revenue measures that may \"discourage investment.\"\n - Recommendation to rely more on direct support to vulnerable households rather than costly and ineffective price caps.\n - Direct support to vulnerable groups and refinement of regulated household energy tariffs recommended to \"improve price signals, be fairer, and be more cost-effective.\"\n - Contingency measures considered important given significant uncertainty.\n- Monetary and financial sector policy:\n - Directors welcomed \"significant monetary tightening\" and emphasized need to maintain \"a well-communicated, tight policy stance until inflationary pressures clearly and sustainably ease.\"\n - Interest rate caps \"hamper monetary policy transmission\" and Directors called for their abolishment.\n - Maintaining exchange rate flexibility \"remains important as a shock absorber.\"\n - While banking sector buffers are noted as sound, \"continued financial supervisory vigilance is needed, as credit risk may rise due to slower growth and higher interest rates.\"\n- Structural and governance recommendations:\n - Press ahead with structural reforms and meet requirements for the full and timely receipt of EU funds to finance reforms in energy transition, digitalization, and governance.\n - Enhance energy security given near-term risks to energy supply.\n - Strengthen governance and transparency, the rule of law, judicial independence, and the anti-corruption and AML/CFT frameworks to improve the business environment, the efficiency of public spending, and medium-term growth." }, { "heading": "Hungary: Selected Economic Indicators, 2018–2022", "content": "- Output\n - Real GDP growth (%): 2018: 5.4; 2019: 4.9; 2020: -4.5; 2021: 7.1; 2022: (Proj.) 5.1\n- Employment\n - Unemployment rate (average %): 2018: 3.7; 2019: 3.5; 2020: 4.1; 2021: 3.6; 2022: (Proj.) 14.5\n- Prices\n - Inflation: 2018: 2.8; 2019: 3.4; 2020: 3.3; 2021: 5.1; 2022: 14.5\n - (Note in text: inflation \"among the highest in Europe at 24.5 percent y/y.\")\n- General government finances (percent of GDP)\n - Revenue: 2018: 44.0; 2019: 43.5; 2020: 41.3; 2021: 43.9; 2022: 50.0\n - Expenditure: 2018: 46.2; 2019: 46.1; 2020: 51.1; 2021: 48.4; 2022: 50.0\n - Fiscal balance: 2018: -2.1; 2019: -2.0; 2020: -7.5; 2021: -7.1; 2022: -6.1\n - Primary structural balance (percent of potential GDP): 2018: -0.7; 2019: -1.1; 2020: -4.7; 2021: -4.0\n - Public debt: 2018: 69.1; 2019: 65.3; 2020: 79.3; 2021: 76.8; 2022: 76.4\n - Gross financing need: 2018: 21.1; 2019: 23.4; 2020: 24.6; 2021: 21.4; 2022: 17.5\n- Money and credit\n - Broad money (% change): 2018: 11.8; 2019: 8.1; 2020: 16.3; 2021: 11.5\n - Credit to the private sector (flow based, % change): 2018: 10.6; 2019: 15.3; 2020: 12.8; 2021: 10.9\n - Government bond yield (5-year, average, %): 2018: 2.2; 2019: 1.6; 2020: 1.5; 2021: 2.4; 2022: 9.5\n - 5-year sovereign CDS (average in bps): 2018: 86.6; 2019: 80.4; 2020: 67.2; 2021: 68.2; 2022: 69.2\n- External sector\n - Current account (% of GDP): 2018: 0.2; 2019: -0.8; 2020: -4.2; 2021: -8.1\n - Reserves (percent of short-term debt at remaining maturity): 2018: 162.1; 2019: 160.8; 2020: 150.8; 2021: 139.4; 2022: 98.1\n - External debt (% of GDP): 2018: 79.2; 2019: 73.1; 2020: 81.0; 2021: 84.7; 2022: 85.4\n- Exchange rate\n - Exchange rate, HUF per euro, period average: 2018: 319.3; 2019: 325.2; 2020: 351.2; 2021: 358.5; 2022: 391.1\n - REER (% change, \"-\" = appreciation): 2018: 1.8; 2019: 0.7; 2020: 4.8; 2021: -0.2; 2022: …\n\nSource: IMF Executive Board Concluding Statement, \"IMF Executive Board Concludes 2022 Article IV Consultation with Hungary\", February 3, 2023.\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/index.md)", "[Structured JSON version](/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/index.json)", "[Bundle manifest](/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/bundle-manifest.json)", "Published: February 3, 2023", "Date of conclusion: February 1, 2023.", "Key shocks and developments:", "Overall assessment:", "Fiscal policy:", "Monetary and financial sector policy:", "Structural and governance recommendations:", "Output", "Employment", "Prices", "General government finances (percent of GDP)", "Money and credit", "External sector", "Exchange rate", "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)", "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)", "[PRESS CENTER](http://presscenter.imf.org/)", "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/index.md", "json": "/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/index.json", "bundleManifest": "/en/news/articles/2023/02/02/pr2330-hungary-imf-executive-board-concludes-2022-article-iv-consultation/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T01:49:54.937Z" }