The European Central Bank (ECB) has urged Hungary to make “wide-ranging structural reforms” and adopt “stability-oriented economic policies” in its Convergence Report 2016 released this week, MTI has reported.
ECB stated that economic policies that promote private sector-led growth are needed to drive up Hungaryʼs potential growth.
It recommended improving the quality of public institutions, reducing red tape for businesses and reconsidering the “excessive tax burden” on the private sector, specifically sectoral taxes.
The ECB noted that the European Commission had established in a recent review that Hungary is not experiencing macroeconomic imbalances.
In a section focused on the National Bank of Hungary, the ECB said Hungarian law does not comply with all of the requirements for central bank independence and the prohibition on monetary financing.
The ECB also highlighted other EU nations who do not fully comply with the legal frameworks required for the adoption of the euro, these included: Bulgaria, Czech Republic, Croatia, Poland, Romania and Sweden, in addition to Hungary.
The report cited incompatibilities regarding central bank independence, in particular their institutional and financial independence, and in all of the countries but Croatia there are incompatibilities with regard to the prohibition of monetary financing.
Achieving sustainable economic and legal convergence is necessary to successfully adopt the euro, the ECB concluded.