Hungary's Bold move: Government Considers Technical Change to Boost Economy

 Hungary is on the brink of a decision that could potentially reduce the cost of borrowing and give a much-needed boost to its economy. The government is considering a technical change in the calculation of loan repayment rates, which would replace interbank rates with Treasury bill yields as the new benchmark for corporate and retail loans. This move is part of Prime Minister Viktor Orban's effort to revive Hungary's economy, which has been struggling in the wake of a surge in inflation last year, pushing the country into recession.

Finance Minister Mihaly Varga has expressed confidence in the potential benefits of this proposal, stating that it is a legitimate point that will be good for the financial institutions and the government. However, the proposal has been met with criticism from the Bank of Hungary, which believes it could reduce the scope for policy maneuver. S&P Global financial institutions analyst Lukas Freund has also expressed concerns, calling the proposal another example of Budapest's unconventional policy that aims to boost the economy but poses a risk to the financial sector.

Despite the opposition, the government is determined to move forward with its plan and is expected to make a decision in the coming days. The outcome of this decision could have significant implications for Hungary's economy and its financial sector. As the country aims to chart a path towards recovery, the debate surrounding this technical change will continue to unfold in the days to come.