Hungary

Food prices have risen dramatically across Europe in recent months, jumping 19.6% in March from a year earlier and becoming the main driver of inflation as energy costs have fallen. But in Hungary, food prices have surged more than 45% over the year, according to EU statistics office Eurostat, far surpassing the next highest figure of just over 29% in Slovakia, the Associated Press reported.

Hungary’s capital Budapest adopted a “survival package” of cuts to avoid bankruptcy as the opposition-led city’s mayor blamed Prime Minister Viktor Orban’s government for squeezing revenue for political gain, Bloomberg News reported. In the latest clash between Orban’s nationalist government and cities led by Hungary’s fractured opposition, Budapest Mayor Gergely Karacsony said his office would stop paying taxes to the country’s Finance Ministry in an effort to keep providing services including public transport and paychecks for the city’s 27,000 employees.

Hungary's January annual inflation is expected to rise above 25% but in February price growth will start slowing which could then allow the central bank to gradually start reducing its interest rates, the minister for economic development said on Sunday, Reuters reported. Marton Nagy, a former central bank deputy governor, told state radio that the "very high" interest rates made the government's job difficult and harmed the economy. Prime Minister Viktor Orban's government is trying to avoid economic recession at a time when inflation is still running well above 20%.

Some European Union lawmakers warned the bloc's executive Commission against unlocking billions of euros in funds for Hungary, saying Prime Minister Viktor Orban was trampling on democratic norms, Reuters reported. The Brussels-based European Commission is expected next week to endorse giving to Hungary funds worth as much as a tenth of the country's estimated 2022 GDP after Budapest moves to improve anti-graft safeguards and the independence of its judiciary.

The National Bank of Hungary (NBH) left its base rate unchanged at 13% on Tuesday and pledged to maintain tight monetary conditions for a "prolonged period", with inflation only set to decrease more significantly from mid-2023, Reuters reported. The central bank said annual inflation, which was running at 21.1% in October, was now primarily driven by a surge in food prices, where further "unpleasant surprises" could be on the cards in coming months.

Hungary will include variable-rate loans to small- and medium-sized businesses in a scheme designed to cap loan rates and avoid a recession, Minister for Economic Development Marton Nagy said, adding banks could "easily" bear the cost of the measure, Reuters reported. With inflation above 20% and still rising, and the economy slowing, Prime Minister Viktor Orban's government faces the challenge of curbing price growth while trying to stave off a recession. It has already capped the price of fuel and basic foodstuffs as well as mortgage rates. Energy bills are also capped for most households.

Hungary's central bank accepted 2.093 trillion forints ($4.90 billion) worth of bids from banks at its first floating-rate two-month deposit tender on Wednesday as part of its efforts to drain forint liquidity and tighten monetary conditions further, Reuters reported. The National Bank of Hungary (NBH), which ended its cycle of rate hikes last month taking the base rate to 13%, has said it would deploy an array of tools to tighten liquidity conditions from this month, including the new deposit instrument.

The Hungarian government will submit the first of several anti-corruption bills to parliament on Monday, its spokesman said, as Budapest scrambles to avoid losing billions of euros in European Union funding, Reuters reported. The European Union executive recommended on Sunday suspending funds worth 7.5 billion euros ($7.48 billion) due to what it sees as Hungary's failure to combat corruption and uphold the rule of law. The European Commission also set out requirements for Hungary to keep access to the funding, including new legislation, which Hungary immediately said it would meet.

August 31 China Evergrande Bondholders Push Own Plan for Debt Restructuring Global funds that invested in China Evergrande Group's bonds have come up with their own debt restructuring plan for the property developer and demanded that its chair repay liabilities with his own fortune, the Financial Times reported on Tuesday, according to Reuters. With more than $300 billion in liabilities, Evergrande, once China's top-selling developer, has been at the centre of the crisis and its debt restructuring plan is seen as a possible template for others.

Hungary raised objections over the implementation of a global minimum tax in the European Union on Tuesday, saying it can only support a proposal that does not disadvantage firms operating in Hungary, and citing additional risks due to the Ukraine war, Reuters reported. Nearly 140 countries reached a two-track deal in October brokered by the Organisation for Economic Cooperation and Development (OECD) on a minimum tax rate of 15% on multinationals.