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Feb 28, 2019 - Zoltán Kovács

Here is the National Bank’s Competitiveness Program

The National Bank of Hungary has presented its new competitiveness program, a 330-point plan that adapts to Hungarian circumstances best practices from around the world to improve the country’s potential to be a contender and close the gap on Hungary’s level development compared to its western neighbors.

The NBH program covers 12 key areas important for the Hungarian economy to close the gap with its competitors by mobilizing the reserve resources of the country and generating economic growth. To catch up in a sustainable way, Hungarian economic growth must be higher than 4 percent for an extended period.

Hungarian-owned, small and medium-sized enterprises will deliver the most important source of this growth, and it should come from the improvement in their productivity and greater competitiveness, supported by a more efficient banking system and the significant expansion of alternative financing forms such as the stock market or the corporate bond market.

Other priorities include improving health and supporting family life and child bearing. The freeing up and more efficient use of reserves in the labor market continues to be important, along with sustainable wage increases, reductions in personal income tax and the strengthening of adult education and training opportunities.

The NBH’s plan sets a goal of GDP growth that exceeds by 2 percent the GDP of developed countries, along with a one-digit personal income tax and a doubling of the loan-to-GDP ratio in a balanced structure. R&D spending should be raised to 2 percent of GDP, and the unemployment rate should be kept below 6 percent in all counties.

The NBH recommends that energy imports be reduced to below 50 percent and state debt should be held domestically. At least one Hungarian university should rank in the top 200 in the world. On the field of demographics, the country needs to see a growth in population of at least 110,000 people per year and a continuous increase in healthy life expectancy for 64 years. 

The bank would like to see more lending, an increase in both residential and corporate lending and a greater will to lend on the part of the banks, even extending loans to more risky borrowers but without jeopardizing financial stability.

With this plan, says NBH, by 2030, Hungary can reach 80-90 percent of Austria's level of development and double net real earnings.