There is no Hungarian way to combat the crisis - 20-05-2014

‘The Hungarian government agrees with the Polish government that every Member State of the EU should create its own energy mix, depending on internal conditions in a given country,’ said Zoltán Cséfalvay, Minister of State for Economic Strategy in the Ministry for National Economy of Hungary.

‘Countries of Central Europe have a strong industrial base. In Hungary, the industry has a 25 per cent share in the creation of the GDP. Therefore, it is a matter of the utmost importance to ensure access to cheap energy in order to develop and maintain the existing jobs. If we wish to be competitive, both as a region and as the EU in its entirety, we have to solve the problem of finding cheap energy sources,’ emphasised the Minister.

He also restated that the price of electricity in the USA is approximately half the average price in the EU and the price of natural gas amounts to one-third of its price in Europe.

In the opinion of Minister Cséfalvay, there are two reasons for such a huge disproportion. The first involves the internal regulations in the EU, including the climate and energy policy being currently implemented. The second reason resides in the sources of supply of energy resources.

‘Politely speaking, energy prices in the EU are not right and their level is additionally influenced by government subsidies applicable to RES,’ emphasised the Minister.

Taking these indications as a starting point, the Hungarian government decided to enlarge the Hungarian infrastructure with two new units of a nuclear power plant. This is to ensure stable electricity supply in the future and improve the energy mix.

In the opinion of the Ministry for National Economy, this long-term investment (electricity generated in the new units will be available no sooner than in 10 years) constitutes a very advantageous solution from the business point of view. Hungary will receive a loan from Russia to finance the investment and the repayment period will start only after the new units are launched. Moreover, considerable part of the funds to be spent will remain in Hungary, for the construction will be implemented by Hungarian enterprises.

‘The power plant operator will not receive any financial help from the Hungarian government in the future. It is a commercial enlargement of an existing power plant,’ emphasised the Minister. The Ministry for National Economy is not yet able to quote the price of 1 kWh of energy generated in the new units because the issue concerns a situation that will set in 10 years from now, so there are too many variables related to the global energy market to provide accurate estimates today.

Assessing the 10 years of membership of the countries of Central Europe in the EU, Zoltán Cséfalvay said that the most important factor in their development was not so much cohesion funding, but the access to the common market. He also emphasised that the past decade in Hungary was marked in half by the economic crisis and the actions aimed at combating it.

‘At present, Hungary has regained a stable basis for economic growth, after the crisis management mode was implemented by the previous government,’ emphasised Minister Cséfalvay.

The budget deficit has remained reduced below 3 per cent for the last two years and the ratio of public debt to the GDP was also reduced to a safe level. This year, according to the assumptions made by the Hungarian government, the GDP will increase by approximately 2.5 per cent.

‘There is no such thing as a “Hungarian way of fiscal consolidation”,’ added the Minister.

In his opinion, the controversies were aroused by the government’s position during the negotiations with the IMF. ‘We said it clear that there has to be an equal division between the risks and charges, which are to be allocated evenly between the state, the society and the enterprises. We were the first to say that it was necessary to introduce a tax on banking transactions, which caused the IMF’s reaction, but soon became reality in 10 other European countries,’ stated the Minister.

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