While there is a good chance the Hungarian parliament will pass key modifications to the controversial central bank law, which will satisfy both the EU and IMF demands, there could be a new dispute on horizon. PM Orban presented a new jobs growth plan, which is based on major cuts in social security contributions and new simplified taxes for small businesses. While such a supply-side policy could really help the economy, the dark side of the HUF 300bn program is a recently proposed financial transaction tax, which should help to fund the above mentioned revenue gap. The proposed amendment of financial transaction tax involves the Central Bank (MNB) and the Treasury. It is not surprising that MNB’s Governor Simor voiced its opposition to such a plan, which will limit both use of the MNB funds (which is illegal) and generate additional loss to the central bank worth of HUF 100bn in 2013 (the amount should go to the public budget).
Thus, it is quite clear there is a new dispute between the government and the MNB, which might further escalate and thus might lead to fresh disruptions in relations between the government and IMF and EU (ECB) respectively.