On Friday, the Polish zloty as well as the Hungarian forint firmed regardless of questionable political drafts. In Poland, the Government has probably conclusively decided to put an end to the pension reform launched at the end of the 20th century. According to a statement by Prime Minister Tusk, the reform will be based on the Government ‘draining’ private funds of the money invested in government bonds, i.e., approximately half the assets of those funds. This will reduce public debt by approximately 7% of GDP. In addition, participation in the ‘second pillar’, which was previously mandatory, will be made voluntary. In other words, at least some of the money previously invested in private funds is likely to be redirected into the state budget. The Government had already made its intention to transform pension system in late June, and therefore the latest news came as no great surprise. What is surprising, however, is that the Government has chosen to implement probably the toughest combination out of the measures suggested at that time; moreover, it has probably done so without consulting the private funds.
In Hungary it was again Prime Minister Orbán, who came with a controversial statement. Orbán warned the domestic banks on Friday that they should modify households FX loan contracts by November and bear most of the losses or elsewhere the government would act, without specifying what would be the action. Nevertheless the Bank Association is still in negotiations with Economy Minister and given the mute market reaction it is clear that most of the market participants took Orban’s words as pre-election campaign rhetoric.