'This economic policy has not led to Hungary catching up, but rather to falling behind its neighbors' – former Central Bank governor

This week's guest on Telex's podcast "Téma with Gergő Brückner" was András Simor, who was head of the Hungarian Central Bank (MNB) between 2007 and March 2013. Since his retirement, the former Central Bank Governor has made few public appearances. He currently serves as a member of the supervisory board of the Austrian Erste Bank and as chairman of the board of trustees of the Budapest Festival Orchestra.

Despite being retired, his recent interview with an Israeli newspaper was so well received in the local press that he soon found himself a speaker at a conference in Tel Aviv, where he was asked to discuss "what happens when democracy is dismantled in a country and what the impact is on the economy" (Israel has understandably been very interested in the subject of 'orbanisation' recently.)

According to Simor, the Orbán government bears a major responsibility for the level of inflation being so high in Hungary and for its slow decrease, even though the Prime Minister is trying to pass this responsibility on to the MNB. As he said,

the government's actions aimed at easing the economic downturn in the short term (such as continuing to offer cheap loans to companies through the Baross Gábor program), and mitigating the decline in GDP, are actually bad for the country's catching-up in the long term. They are, however, clearly beneficial politically.

"If I eat excessively for three weeks in a row, I'll gain weight. Then I'll go on a diet, and that's not just a diet in itself, but it's a form of punishment, if you like, for overeating for three weeks. And this is what has been happening in the Hungarian economy; there has been economic growth, which wasn't deemed enough, because "we'll get ahead of the curve", and we will show that we not only know everything, but we know everything better than others, and we have been accelerating growth all the time. This is a high-pressure economy, we even manufactured a theory for it.

We have had budget deficits when when there shouldn't have been any, we've had low interest rates when we shouldn't have had them. There have been all kinds of credit programs that were no longer needed. And the price of this is that Hungary now has much higher inflation than anywhere else in Europe."

- the former central bank governor said. He added that the results of the government's activities over the past decade should be assessed in comparison with the surrounding countries, and if we do so, the picture is not very rosy.

"This economic policy has not caught us up, I would even say that it slowly put us behind the surrounding countries instead. So the attitude of trying to show the world that we can do everything better and we do everything differently has not brought us more of anything, except a lot of risks for the country," he said.