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EBRD builds on Hungary’s successful development
Bank unveils new country strategy
Hungary is one of the most advanced countries among the new EU members and the
accession to the European Union has boosted its economic performance. Growth
reached 4.2 per cent in 2004 and is expected to be 3.5 per cent this year.
Despite remarkable progress in transition, macroeconomic imbalances remain
significant, the EBRD says in its new strategy for Hungary, approved today.
Further fiscal measures are necessary to avoid a destabilisation of the
economy and enable Hungary’s accession to the Euro zone as planned in the
medium-term.
A number of key challenges still require attention:
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Structural measures are needed to reduce fiscal deficits and public
expenditures, including in the healthcare, transport, education and pension
sectors as well as local government;
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New financial instruments are required to address the needs of small and
medium size enterprises in the agricultural sector;
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Non-banking financial institutions require consolidation and strengthening,
including higher efficiency of the pension fund system and the diversification
of investment portfolios through the development of local equity markets and
the introduction of new financial instruments;
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Transport and environmental infrastructure needs improvement with the
assistance of EU structural and cohesion funds, private sector involvement and
local commercial co-financiers;
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Investments in energy efficiency and renewable energy need to be promoted.
To support fiscal consolidation and further progress in transition the EBRD,
which has already invested €1.8 billion in Hungary since 1991, will focus on:
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Continue to work closely with local financial intermediaries to provide
finance to micro, small and medium-sized enterprises;
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Provide higher risk products to fund the growth of local corporations, in
particular in the context of cross border expansion;
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Work on high quality public private partnerships in the infrastructure sector,
including in cooperation with EU structural and cohesion funds;
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Identify and fund energy savings projects and renewable energy projects.
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