Hungary: 2024 Article IV Consultation-Press Release; and Staff Report

International Monetary Fund

No 2024/268, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that Hungary is emerging from a period of shocks. The pandemic, Russia’s war in Ukraine, and crisis-related stimulus widened fiscal and external imbalances and triggered double-digit inflation in 2022. Thanks to an effective monetary policy response aided by falling commodity prices and a tighter fiscal stance in 2023, inflation came down significantly, while the labor market and financial sector remained resilient. Despite some progress, the ongoing negotiations on the super milestones, including the Commission’s assessment of governance conditions, are delaying the disbursement of EU funds, which are vital for digitalization, regional integration, and the green transition. A credible and growth-friendly fiscal adjustment plan is needed to safeguard macroeconomic stability. Monetary policy should remain in restrictive territory to deliver a sustainable return of inflation to target. Coordinated policy approach is needed to improve Hungary’s productivity, reduce regional inequality, strengthen governance, and advance the green transition.

Keywords: safeguards assessment of the Magyar Nemzeti Bank; control environment; audit oversight; holdings rate; inflation pressure; holdings of SDR; Inflation; Financial sector stability; Housing prices; Europe; Global (search for similar items in EconPapers)
Pages: 85
Date: 2024-08-02
New Economics Papers: this item is included in nep-cis
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