After 10 years as a member of the European Union, Hungary is still in no hurry to adopt the euro as it is enjoying the “advantages” of being outside the 18-country group, government and stock exchange officials have told CNBC.
Investors and euro-watchers had expected Hungary to join the single currency not long after it joined the EU a decade ago – but has yet to reach the right economic and fiscal conditions to sign up. The country’s high level of government debt — which peaked at 83 percent to gross domestic product, in 2010, when Prime Minister Viktor Orban’s government came to power – makes the move impossible.
Hungary still uses its currency, the forint but now a move to the single currency is no longer of “immediate interest,” according to the Hungarian government’s international spokesperson, Zoltan Kovacs.
“Not being members of the euro zone at the moment has advantages for the country. Taxation policies really help the economy, we are trying to utilise that for the best in policy making,” he told CNBC.
The government’s goal is to reduce its debt to GDP ratio to 76 percent in the next year and according to Organization for Economic Cooperation and Development estimates, 75 percent is realistic in the next two years. But this figure is still significantly higher than the 60 percent required by the EU to join to euro zone.
“It is not an immediate interest of the country, because the economy, the structures that we are running need to be up to a standard that would make it beneficial for the country to join,” Kovacs said, adding that there is currently no fixed target date for the country to join the euro area.