Hungary

The sustainability of Hungary’s public debt, the highest in Central Europe as a percentage of gross domestic product, continues to be at risk despite the European Commission’s recommendation that the European Union lift its strict budget monitoring of the country later this month, an analyst from Moody's Investors Service said Monday, The Wall Street Journal Emerging Europe blog reported.

Hungary should bring in personal insolvency legislation to help to deal with bad debts left over from the country's property boom, a senior official from Hungary's central bank said on Wednesday, Reuters reported. "For non-performing (loans) at the moment there is no efficient programme in place," Marton Nagy, managing director at the National Bank of Hungary, said at a business conference. He said there was no mechanism currently to deal with borrowers' entire debt.

Gyorgy Matolcsy, the governor of Hungary’s central bank , on Thursday revealed a package of measures potentially worth up to €4.6bn designed to stimulate growth in Hungary’s flagging economy, the Financial Times reported. Mr Matolcsy, who caused controversy as the architect of Hungary’s “unorthodox economic policy” when economy minister from 2010 until last month, said the plan, dubbed Funding for Growth, would provide cheaper credit to small and medium-sized businesses and reduce foreign exchange risks to creditors.

Hungary wants to impose a punitive 35% capital gains tax on assets its nationals deposited in Switzerland, but it may have a hard time getting information out of the Alpine country, according to a French-based consultancy, The Wall Street Journal Emerging Europe blog reported. The Hungarian government allowed assets to be repatriated under benign conditions of a 10% capital gains tax rate over the past two years ending Dec. 31, 2012, which it referred to as a tax amnesty. The 35% rate it now plans to impose, and apply retroactively, would in comparison count as a penal tax rate.

Hungary's premier on Thursday said his government wouldn't agree to conditions sought by the European Union and International Monetary Fund in exchange for a financial-support package, saying the country would rather forgo help than cut pensions or ease banking taxes, The Wall Street Journal reported. Prime Minister Viktor Orban's tough remarks—a sharp shift from more conciliatory comments he made Wednesday—jolted investors, pushing down Hungary's currency, the forint, and driving up yields on government debt, as well as the cost of insuring it against default.

The European Commission is to consider Wednesday whether to start formal talks with Hungary on a precautionary loan package, after delaying negotiations for months amid disagreements about the independence of the country's central bank and other contentious issues, The Wall Street Journal reported. After a meeting in Brussels on Tuesday with Hungarian Prime Minister Viktor Orban, the commission's president, José Manuel Barroso, said he welcomed Mr. Orban's promises of "prompt and full implementation" of changes to Hungary's new central-bank legislation.

European finance ministers agreed to suspend European Union funds destined for Hungary because of its failure to hit budget targets while, under pressure from other euro-zone governments, Spain agreed to deeper budget cuts than it had planned for this year, The Wall Street Journal reported. The two developments on Tuesday are signs of how the tougher policing of government budgets introduced since the onset of the sovereign-debt crisis is likely to generate tensions within the EU.

The European Commission proposed Wednesday to suspend €495 million ($602.2 million) in European Union budget funds for Hungary in 2013 unless it acts quickly to cut its deficit, The Wall Street Journal reported. Hungary's government found the suspension proposal unfounded, unfair and legally disputable, saying it has already taken prudent steps, while an economy ministry official said there was no "practical chance" that the funds would be suspended.

The collapse of Hungary’s national airline, Malev, will likely make such a big hole in the country’s budget it has attracted the inquiring eye of the International Monetary Fund, The Wall Street Journal Emerging Europe blog reported. State-owned Malev terminated its operations last week under the weight of crippling debt. Although it hasn’t formally gone bankrupt, it has already announced that it will dismiss its staff, and has returned the leased aircraft in its fleet.

The liquidation of Hungary's national airline Malev would cost the state HUF1 trillion ($4.6 billion) under the provision of a contract, government commissioner Gyula Budai said Wednesday, Dow Jones DBR Small Cap reported. The sum is payable under a provision of a contract signed back in 2007 between the Hungarian government and the owner of the Budapest Liszt Ferenc Airport, Germany's Hochtief AG, Budai said.