From hungary-online-owner Tue Mar 14 14:28:21 1995 Return-Path: owner-Hungary-Online Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id OAA24550 for hungary-online-out31415; Tue, 14 Mar 1995 14:28:21 -0800 Received: from localhost (daemon@localhost) (fnord) by nando.yak.net (8.6.5/8.6.5) id OAA24532; Tue, 14 Mar 1995 14:28:01 -0800 Received: from 100263.15@compuserve.com () via =-=-=-=-=-= for hol@hungary.yak.net (24530) Received: from dub-img-3.compuserve.com (dub-img-3.compuserve.com [198.4.9.3]) (fnord) by nando (8.6.5/8.6.5) with ESMTP id OAA24527 for ; Tue, 14 Mar 1995 14:27:42 -0800 Received: by dub-img-3.compuserve.com (8.6.10/5.941228sam) id RAA09626; Tue, 14 Mar 1995 17:27:11 -0500 Date: 14 Mar 95 17:23:10 EST From: "Rick E. Bruner" <100263.15@compuserve.com> To: Hungary-Online Subject: (HOL) HAC-Online Message-ID: <950314222309_100263.15_EHQ91-2@CompuServe.COM> Sender: owner-Hungary-Online@hungary.yak.net Precedence: bulk Reply-To: Hungary-Online@hungary.yak.net Greetings All, Thought you'd be interested in the first: Hungary Around the Clock--online. For those who don't know it (which is probably most of you), this is an excellent daily news service produced by City Media (Bp Week's parent company -- the one that stole the newspaper from me and Steve ), the brainchild of Paul Olchvari and Steve-and-my co-founding partner in Bp Week, Tibor Szendrie. Until now, for about the last year, HAC has been available only by fax. Today was the first-ever version online. Since the sudden news Sunday of the massive devaluation of the forint and accompanying surprise economic reforms sprung on us by the new government, today's issue makes particularly interesting reading. I've done a bit of reformatting, as their layout was just huge blocks of text, but my text editor is a bit funky, too, so excuse the fact that it's not beautiful. Don't think that I'm violating copyright on this. Wouldn't dream of it. I got explicit permission from Tibor to upload this one edition, for introductory purposes only. Don't expect to see another copy soon unless you're willing to shell out massively: the price of the service is $80/month, and up. That's right, per MONTH. Yes, HAC can be yours, too, for a modest $960 a year. God I love Hungarian information-service marketing. Cheers, Rick PS: In case anyone is actually interested in signing up or otherwise contacting them, here's the email address: <100324.141@compuserve.com>. They're such newbies still they didn't even think to include that anywhere in the text. ;P -------------------------------- Hungary Around the Clock H-1067 Budapest Eotvos utca 12. Tel: 268-1450 Fax: 322-2225 Tuesday January 14, 1995 Domestic Politics Opposition rejects new economic policy, gov't promises more of the same Foreign Relations Horn responds to Clinton letter Romanian treaty talks go on amid criticism Economy and Finance Bokros explains all to IMF officials Devaluation isn't the whole story, says trade official Newsline Experts favor new gov't policy, with reservations Watching the forint fall Corporate Credit Suisse backs away from Budapest Bank Compaq sales up 54% in '94 Cellular phones may cost more, too Other Items of Interest Holiday traffic restrictions Unemployment may grow even more thanks to new economic program A weary weekend for travelers into Austria Ex-soldier goes AWOL in reverse As the Hungarian dailies will not be published on March 15, Hungary Around the Clock will next appear on Thursday. Domestic Politics Opposition rejects new economic policy, gov't promises more of the same While opposition parties condemned the government's new economic measures on Monday, Finance Ministry officials told the press the government is planning further economic restrictions. According to the government's plans, the amount of family allowance payment per person cannot exceed Ft 15,000 a month; customers' tax on cars will increase by 10% and medical checks will cost citizens 18-62 years old Ft 500 per month. The measures are part of the dramatic short-term economic stabilization package announced by the government on Sunday. The package also includes the devaluation of the forint by 9%, the abolition of automatic family allowance payments, and the introduction of a Ft 2,000 monthly fee for post-secondary education. Explaining the new program to Parliament, Prime Minister Gyula Horn said "Hungary is drifting towards an unmanageable crisis." The first signs of the crisis appeared well over a year ago, he added, pointing out that Hungary's internal debt rose from Ft 1,500 billion to Ft 3,800 billion from 1990 to 1994. "We are not going to join the line of governments that increase this debt by hundreds of billions more," Horn said. The new package, he declared, emphasizes economic growth, while securing the operation of the country, encouraging investment and making the country's economic policy predictable. With the measures, the government expects to cut back the state budget deficit by Ft 170 billion, Finance Ministry officials said. About Ft 70 billion of this sum is expected to come from increased revenues, and the rest as a result of reduced expenditure. Reacting to the new program, Young Democrats parliamentary faction leader Jozsef Szajer said his party was shocked to learn of the governments anti-social and anti-youth decisions. He said the social-liberal coalition has driven the country into deep crisis during the past eight months, and added that now it must be clear to everyone that the Horn government is a liar. Tamas Isepy, faction leader, Christian Democrats (KDNP) said the underlying problem is that the welfare system consumes an ever greater part of the countrys GDP. While the governments measures give the impression that they serve economic stabilization in reality they will fuel inflation, he said, with consequences that are impossible to gauge at present. According to Isepy, the proposed anti-inflationary measures are likely to prove inefficient. The planned introduction of tuition fees will eliminate equal access to education, which he said is unacceptable. In short, Isepy described the measures as a jump into darkness. Ivan Peto, president of the Free Democrats (SZDSZ), said the government made the moves out of necessity, and not out of love. He said the policies of the past four years, and also those of the past 20-odd years, have made these moves inevitable. This was a now or never situation, he said, acknowledging that these steps should have been taken much earlier. President Jozsef Torgyan of the Smallholders Party (FKGP) said the March 14 demonstration his party originally called for to protest against the pending signing of basic diplomatic treaties with Slovakia and Romania, will now also serve as a venue for public protest against the governments policy. He accused the Horn government of doing "nothing but dismantling the achievements of the past four years." In a heated speech, Torgyan called on the government to draw the necessary conclusions and resign. Democratic Forum faction leader Ivan Szabo, said the only thing the Horn government is good at is crisis management. If there is no crisis, it creates one so that it can eventually manage it. Szabo described the Horn governments first eight months as an era of improvisations and procrastination, and said this has landed the country in its current dire straits. He accused the cabinet of failing to assess the consequences of its decisions in advance. The Socialist Partys parliamentary leader, Imre Szekeres, rejected the oppositions criticisms as unfounded and unnecessarily hostile, and said Hungary has already missed two opportunities - one in the late eighties, the other in 1992 - to set the economy back on track. This was the third and last such opportunity, which we could not miss, he said. At the conclusion of the debate, Prime Minister Horn called on the opposition parties to look into the mirror sometimes, and to refrain from pretending that they have nothing to do with the fact that Hungary is now in the midst of a deep economic crisis. Horn reiterated his hope that the six parliamentary parties will continue to seek consensus on major issues, and will approach these in a befittingly reserved and rational manner. (N pp. 1 & 4) Foreign Relations Horn responds to Clinton letter In a letter sent to President Clinton on Monday, PM Horn declared "Im looking forward to our meeting in Washington in June, and I hope to be able to inform you there of the first results of our program for economic stabilization in Hungary, and also of the expansion of cooperation with the neighboring states." Responding to a letter sent to him recently by Clinton, Horn expressed his thanks for Washington's interest in the furthering cooperation in the region. Horn added that Hungarian membership in NATO would further strengthen stability in the region, but would not create a new dividing line in the continent. (N p. 3) Romanian treaty talks go on amid criticism A delegation of Hungarian diplomatic experts, led by state secretary Ferenc Somogyi, arrived in Bucharest on Monday evening to continue work on the final draft of Hungarys diplomatic treaty with Romania. Meanwhile, in an open letter, Cluj Mayor Gheorghe Funar called on Romanian President Ion Iliescu to summon the leaders of the Romanian parliamentary parties for a meeting to discuss the unconstitutional draft treaty. (N p. 3) Economy and Finance Bokros explains all to IMF officials Finance Minister Lajos Bokros met with an IMF delegation Monday that arrived in the country to meet the country's new financial leaders and discuss the Hungarian economic situation. Sunday, Bokros said the stabilization program implemented by the government was necessary because without it the state budget deficit would have reached 10% of GDP. The recent restrictive measures could reduce this figure to 6-7%. The IMF would like to see the figure at 5% as a condition of the long-term economic restructuring loan Hungary expects to receive from the fund. (N p. 1) Devaluation isn't the whole story, says trade official In fact, the forint will be worth 17% less Gyorgy Vamos, chief secretary of the National Trade Association (OKSZ) told journalists Monday commenting on the 9% devaluation of the national currency. According to Vamos, the inflationary effects of the new 8% supplementary import tax duty, which takes effect March 20, must also be taken into account. He also predicts that prices will grow drastically, and 10% fewer goods will be sold in 1995. Vamos added that since one third of Hungarys retail turnover is related to imports, Mondays measures will produce an immediate increase in retail prices. (N p. 5) Newsline Although experts at the Hungarian Oil Company (MOL) gave no official statement regarding the effects of the forint devaluation on gas prices, Managing Director Andrea Kolozsar said the 9% decline will probably mean an extra Ft 2.5-3 for a liter of gas (plus 25% VAT). At the same time, the projected further devaluations (1.9%, then 1.3% per month) will each add Ft 0.5 to the price of petrol. (N p. 5) Due to top secrecy regarding the forint devaluation, the National Customs Headquarters were not involved in the decision-making. This prevented customs authorities calculating the import an export duties in accordance with the new currency rates from the moment it took effect. (N p. 5) According to Nepszabadsag, Welfare Minister Pal Kovacs will resign from his post effective today, and political state secretary at the Welfare Ministry Mihaly Kokeny, and Peter Lepes, the deputy state secretary supervising health issues are also contemplating resignation. (N p. 5) The Teachers Trade Union (PSZ), the Teachers Democratic Trade Union (PDSZ), the Trade Union of Higher Education Workers (FDSZ), and the National Trade Union of Higher Education (OFESZ) released communiques protesting the government measures. FDSZ also called a demonstration for April 3 at the Eotvos Lorand University (ELTE). (N p. 5) Car importers predict a 15% drop in turnover because of the forint devaluation and the new supplementary import tax, said Gabor Gyozo, managing director of the National Federation for Car Importers. He said the measures will force a 19% rise in car prices. (Ng p. 3; N p. 5) Experts favor new gov't policy, with reservations Local business community and economic experts consider the governments austerity measures necessary and inevitable, but the same sources have rather strong doubts about the actual effects of these moves, Magyar Hirlap says today. It quotes economic analysts as saying the moves, without a series of supplementary steps, could easily unleash inflation. Meanwhile, several businesses and services have already announced plans to increase their prices in the coming days. The State Railways MAV is set to increase international train ticket prices on March 16, by a maximum of 9%. International train ticket prices will change again on May 28, when MAV will introduce its summer timetable. Domestic prices will remain unchanged. The management of Malev Hungarian airlines is contemplating a ticket price hike. According to Magyar Hirlap, a decision is not due before the end of next month. The telecommunications company Matav Rt. has no plans to increase telephone rates in the near future. Reacting to the forints devaluation, Gabor Szeles, president of the Association of Hungarian Industrialists and CEO of the electronics firm Videoton, said the move was long overdue and was fully justified. However, Janos Minarovits, CEO of the computer company Albacomp, said the currencys drastic devaluation will create a dramatic drop in demand, and will give a fresh boost to the shadow economy. He said the governments package is beneficial to the state budget only, as it promises to increase tax and customs revenues. According to Minarovits, the cumulative effect of the devaluation and the 8% increase of import duties will be a 25% increase in consumer prices, and an annual inflation rate close to 30%. Andras Sugar, general manager of Westel 900 Rt. and president of the Joint Venture Association, said the governments moves more or less met expectations. He said is it doubtful whether the devaluation will really promote exports, because some 40% of Hungarys domestic products are made from imported materials and parts. All told, the Association welcomes the measures, Sugar said. (MH p. 11) Watching the forint fall The chart below, compiled on the basis of the latest National Bank data, reflects the value decline of the forint over the past 12 months with respect to a number of currencies prominent on the international money market. Along with other economic implications, observes Nepszabadsag, this helps explain why the hard currency bank accounts of 50% of Hungarian citizens are kept in German marks, and 12% in Austrian schillings. (N p. 5) Currency Percent decline in Fts value Swiss franc 40.6 German mark 39 Austrian schilling 39 British pound 22.3 US dollar 16.5 Corporate Credit Suisse backs away from Budapest Bank Contradicting earlier reports, Credit Suisse (CS) officials announced yesterday the Swiss bank has decided not to buy shares in Budapest Bank. Credit Suisse was awarded the right to conduct a due diligence investigation into the Hungarian institution earlier this year. Budapest Bank is well-managed and has an appropriate strategy, a CS employee told the press, but its aims are different from those of Credit Suisse. Fitting Budapest Bank into the international group would have caused serious consequences, he said. The Swiss bank has not abandoned plans to acquire shares in other institutions, but has no concrete scheme at the moment, the official added. According to Napi gazdasag, Credit Suisse was to spend $100 million for 60% of Budapest Bank, otherwise struggling with heavy debts. Other foreign banks have expressed interest in buying the bank, which is due to be privatized this year. (Ng p. 1; N p. 14) Compaq sales up 54% in '94 Compaq Computer Kft., the Hungarian subsidiary of the US concern, closed 1994 with a 54% increase in sales, General Manager Matyas Rajkay told a Monday press conference. While Rajkay said he cannot publicize specific figures, in line with company policy, he did reveal that the sales growth was more than three times that of the company's performance in Eastern Europe as a whole. (Vg p. 4) Cellular phones may cost more, too The recent government measures compel Westel 900 Rt. to adjust prices for its cellular phones, and the service fees and methods for the financing of the company may have to be reconsidered, said Eva Torda, the firms deputy marketing manager. At the same time, the other cellular phone company, Pannon GSM, announced that although the 8% supplementary import duty will appear in the prices of its phones, for the time being the company does not plan to increase its service fees. (Ng p. 3) Other Items of Interest Holiday traffic restrictions Several major Budapest thoroughfares and squares will be closed today and tomorrow due to events related to the March 15 national holiday. Traffic will be banned today from 5-9 pm on Marcius 15 ter, Roosevelt ter, Clark Adam ter, the Lanchid (Chain Bridge) and the surrounding area. Kossuth ter and a large section of Muzeum korut will be closed until 1 pm tomorrow, while temporary bans can be expected on Kossuth ter, Alkotmany utca, Bajcsy-Zsilinszky ut, Karoly korut, Muzeum korut, and Margit korut. Parking in the above areas will be prohibited and police are ready to tow vehicles. Tram no. 2 will not operate in the morning, and trolleys no. 70 and 78 will run only on a limited basis. (MH p. 27) Unemployment may grow even more thanks to new economic program A projection prepared by the Labor Ministry shows the number of registered unemployed may grow by 30,000-50,000 in 1995, and by another 40,000-60,000 in 1996. However, the study was done before the governments stabilization program was revealed, and experts predict that the program will increase the above figures. The ministry also plans to introduce restrictive measures, including the abolition of financial support for early retirement, and cutting down on the dole for young people at the beginning of their career. (N p. 3) A weary weekend for travelers into Austria Vehicles headed from Hungary into Austria between Sunday and Monday morning found a long wait ahead, nearly ten hours in some cases, as Austrian customs officials carried out strict and thorough investigations of all baggage entering that country. Austria is expected to soon sign a European Union agreement prescribing maximum scrutiny along the Union's borders to assure maximally open borders within. An Interior Ministry source in Budapest, who wished to remain unidentified, told Nepszabadsag that Vienna presumably wants to check the effectiveness of its customs computer network's links with Brussels, and to gauge the efficacy of enforcing all stipulations of the accord. Although the beefed-up checks were aimed primarily at citizens of Russia, Romania, and the states of the former Yugoslavia, said the source, other travelers have also been affected. (N p. 28; MN p. 28; Vg p. 1) Ex-soldier goes AWOL in reverse A drunken former soldier who apparently thought he was still a soldier tried climbing a fence into a military base in Szentes, southeast Hungary, a few days ago, say authorities, to return to his one-time tank. Instead, after repeated warnings, he was subdued with gunshots to his arms and legs, and ended up hospitalized. (N p. 29) CORRECTION: The March 9 news item "More of Malev in Italy" incorrectly identified Italy's ambassador to Budapest as Vittorio Amadeo Farinelli, as in the Napi Gazdasag article which served as the source for the news. Farinelli is the former ambassador; Pietro Ercole Ago has served in that post since January of this year. Currency exchange rates for March 13, 1995 (National Bank of Hungary): 1 unit, forints medium buy sell exchange currency Austrian schilling 12.14 12.00 12.20 British pound 189.88 187.30 190.78 German mark 85.45 84.47 85.89 Japanese yen (100) 133.14 131.69 133.89 U.S. dollar 120.03 118.84 120.98 Weather: Hooray! Skiing freaks wont need to exchange forints into hard currency - probably a major blow to banks - since there will be plenty of snow in W Hungary. Of course, where they will get the slopes is another question. Of cold and clouds there will be also plenty. Highs will go down 9% to 2-7 , and will stay there for a few days. Don't forget to wish a Happy Nevnap (Name Day) to Matild. Editor Paul Olchvary Domestic Politics, Foreign Relations Tibor Szendrei Economy * Finance, Corporate Zsolt Kozma Copyright C CitiMedia Kft. All rights reserved. No part of Hungary Around the Clock may be reproduced or redistributed. It is not to be reproduced, reused, redistributed or transmitted in any form or by any means, electronic, mechanical, or otherwise, including photocopying and recording, or used in any information storage or retrieval system for other purposes or to other parties without prior written permission from the publisher. In no event and under no circumstances may issues of Hungary Around the Clock be resold. Hungary Around the Clock reserves the right to revoke the subscription at any time for infringements of this agreement. Any abuse will be prosecuted by all means permitted by the law (inter alia full indemnification, penalty, the annihilation of copies). ############# # This message to Hungary-Online@hungary.yak.net # was from "Rick E. Bruner" <100263.15@compuserve.com> # # To unsubscribe, # send "unsubscribe" to # An announcement-only subscription (less volume) is available # at # Send mail to for more information, # or to if you need human assistance. #############