Books on Hungary
% of GDP
Update No: 105 - (30/01/06)
D-Day is in April
The next parliamentary ballot in Hungary is scheduled for April 2006. Nothing
concentrates the mind better, said Dr Johnson, than the prospect of one's own
Naturally Prime Minister Ferenc Gyurcsany is keen to assess the mood of the
More Hungarians are satisfied with him, according to a poll by Gallup. 40 per
cent of respondents have a positive opinion of the prime minister's performance,
up three points since November.
Gyurcsany - a member of the Hungarian Socialist Party (MSZP) - became the
European country's head of government in August 2004, following the resignation
of Peter Medgyessy after a cabinet dispute. Gyurcsany had previously served as
In 2004, Hungary's fiscal deficit was 5.3 per cent of the country's Gross
Domestic Product (GDP). The European Central Bank has set a fiscal deficit limit
of 3.0 per cent to allow countries to adopt the single European currency.
Gyurcsany has set specific tasks for this year, declaring, "Our aim today
is (to adopt the euro) in 2010, for which we will have to do many things in
2006, 2007 and 2008." The prime minister also vowed to enact reforms in
state administration, health care and local government in the first 100 days of
a new mandate, should he obtain it.
Hungary PM Vows Extensive State Administration Reform After Polls
Gyurcsany vowed on January 9 to launch extensive and dynamic state
administration reforms after this spring's general elections.
Gyurcsany has said previously that public administration, health care and
education will be key reform targets. "The reform of the state
administration is absolutely needed and our aim is to bring about the most
intensive and dynamic phase of this process since the end of communism,"
Gyurcsany told a meeting of administrative state secretaries.
The premier added that his government has already started preparations for the
reforms in the past months. "Our aim is to ensure that the next government
will only have to introduce these measures and finish the process by the end of
2006," Gyurcsany said.
The prime minister pledged not to enter into any political bidding over reducing
the number of employees working in state administration. "I don't believe
it's fair or appropriate to demand the halving of the number of state
administrative employees," Gyurcsany said. However he wasn't specific on
what sort of financial or personnel cuts his government would seek.
Administrative expenses at Hungary's ministries have decreased from 83 billion
forints (US$403.4 million) in 2002 to HUF66 billion by 2006, which means that
they'll have dropped 50% in real, or inflation-adjusted, terms, Gyurcsany said.
"It's my firm belief that further reducing administrative costs is
impossible under the current structure," Gyurcsany added.
The ultimate aim of the reform is to introduce the best practices used in the
business world into state administration, Gyurcsany added.
Hungary harvests 16.3m tonnes of grains
Agriculture ministry officials mentioned that according to a business daily Napi
Gazdasag report Hungary harvested 16.3m metric tonnes of grains in the year
2005. The country has 7.3m tonnes of grains and nine million tonnes of corn
after harvesting 96 per cent of the 1.2m-hectare (three million acres) area, the
Budapest-based newspaper reported.
Hungary had 16m tonnes of grains in the five months with 500,000 tonnes sold in
Greece. Other countries buying Hungarian grains include Germany, the
Netherlands, Italy and Bosnia, the newspaper said.
Audi Hungaria to invest 250m Euro next year
Audi Hungaria, the Hungarian affiliate of carmaker Audi, will invest 250m Euro
in Gyor this year, Managing Director, Thomas Faustmann, said, New Europe
Audi Hungaria expects to turn out over 50,000 of the new model annually, he
said. The company plans to start manufacturing a new engine and assembling the
successor to the TT sports car in spring 2006. The revenue of the company will
exceed four billion Euro for 2005, compared to 3.9 billion Euro in 2004, CFO
Franke Heinrich said, adding that the plant's profit would be better than the
previous year. Audi Hungaria employs more than 5,000 people. Production
Director, Guenter Froehlich, said the Gyor-based company produced 1.6 million
engines in 2005, 150,000 more than in 2004.
BAA signs contract to run Budapest Airport
Britain's BAA on December 18th signed a contract with Hungary to run Budapest
Airport, bringing to an end the long-running saga of Hungary's largest ever
privatisation, New Europe reported.
BAA will pay US$2.2bn (1.83bn Euro) for a 75 per cent-minus-one-vote stake in
Budapest Airport - the company that runs Ferihegy international airport - the
board president of the State Privatisation Agency (APV), Tamas Meszaros,
announced. The contract will see BAA run the airport for 75 years. The
privatisation has been dogged by problems, including union action, a potential
US$600m (511m Euro) law-suit by a previous operator and the possibility of the
opposition, Fidesz, re-nationalising the airport if it wins next spring's
Australia's Macquarie earlier pulled out of the bidding amid speculation that
these problems were making investors nervous. BAA beat Germany's Hochtief and
Fraport to win the tender. 6.5 million passengers travelled through the airport
in 2004, making it the third busiest airport in Central Europe after Vienna and
Prague. Last year saw further rapid growth, with a new terminal opening to deal
with the increase in low-coast airline traffic, and all of the bidders have
committed to further expanding operations.
Funds from the airport sale could be used to reduce Hungary's 2005 public sector
deficit, which is expected to come in at 6.1 per cent of GDP.
OTP buys Niska Banka
OTP Bank Rt won the bidding to buy a majority stake in Niska Banka a.d. from the
Serbian government as part of continuous expansion in the region. OTP will buy
89.39 per cent of Niska Banka, based in the south Serbian town of Nis, for an
undisclosed price, the Hungarian bank said recently, New Europe reported.
The buyer expects to complete the transaction in February. Having spent over
US$850 million in the past six years on new acquisitions in the Balkans to
offset a slowdown in its domestic market, OTP now has holdings in Bulgaria,
Croatia, Romania and Slovakia. Currently, it is bidding for another Serbian bank
and a Ukrainian lender. "Serbia's economy and banking system are facing
promising growth, in which the OTP Group wants to take part," Deputy CEO,
Laszlo Wolf, emphasised.
Allianz Hungaria to form commercial bank
Napi Gazdasag reports that Allianz Hungaria Rt, a market leader insurance
company, is going to set up a commercial bank, New Europe reported.
The company's application for permission has already been handed in to the
financial authority PSzAF. Adam Farkas, former CEO of CIB Bank Rt will be the
leader of the new bank. Allianz Hungaria already has a five percent stake in
Takarekbank Rt. After establishing the new bank Allianz will be able to offer
pension savings accounts for its clients, which is not allowed for insurance
companies. However, the application is for the whole range of banking services.
Commercial hub planned for Hungary
Hungary's government commissioner responsible for developing Hungarian-Chinese
relations, Andras Huszty, said in an interview that China wants to build
commercial hub in Budapest with an investment of US$1bn to allow companies from
the country to market and sell their goods across the European Union, New Europe
The 200,000-square-metre China Brand Trade Centre Budapest will host 600 of
"biggest Chinese companies" specialising in electronics, computers,
software and construction. Huszty said, "This is a huge investment. It's
the first such centre in Europe and we are going to be hosting it."
Advertising cheap labour and Hungary's location in the centre of Europe, the
country of about 10 million people hosts more than 3,000 Chinese companies and
attracted US$3bn in imports from China last year. Huszty expects the agreement
for the centre in Hungary to be signed in March, he said.
The Chinese Ministry of Commerce will take over two adjacent Chinese wholesale
centres in Budapest's northeastern 15th district and construct two buildings
next door to complete a planned four-structure complex, scheduled for opening in
2009, Huszty said.
The centre will feature showrooms, shopping areas, restaurants and warehouses
once built. Hungary wants to set up more agreements such as the one between
Chinese television maker Hisense Electric Co Ltd and Flextronics International
Flextronics produces 150,000 TVs for Hisense a year, which the Chinese company
then sells under its brand name in western Europe.
MINERALS & METALS
MetAlService Rt becomes giant in Hungary
Hungary's aluminium semiproduct retailer and wholesaler, MetAlService Rt. has
purchased a 90 per cent stake in sector peer Metalloglobus Felgyartmany Kft.,
and has become a key player in the country's non-ferrous metal distribution
market. Metalloglobus had been virtually a monopoly in Hungary's non-ferrous
metal market before the change of regime in 1989. Business daily Napi Gazdasag
reported on January 3 that MetAlService boosted its market share to over 50 per
cent with this deal. The remaining 10 per cent of Metalloglobus is in the hands
of the management, New Europe reported.
Vodafone is Hungary's best performing mobile carrier
The National Communications Authority (NCA) of Hungary declared on January 3rd
that the number of mobile phone subscriptions in Hungary rose by 0.43 per cent
or 39,000 every month, New Europe reported.
It was 9.142 million in October. The number of subscriptions actually generating
traffic grew by 47,000 to 8.503 million by end-November. The number of mobile
phone subscriptions per 100 inhabitants went up to 90.7 by end-November from
90.3 a month earlier and 84.4 at the end of November 2004. In terms of mobile
subscriptions the market share of Vodafone rose to 21.44 in November from 21.19
per cent in October. It was a little rise in the market share of T-Mobile
Hungary up to 45.09 per cent from 45.08 percent, while that of Pannon GSM
dropped to 33.47 per cent from 33.73 per cent. In terms of subscriptions
actually generating traffic, T-Mobile's market share was 45.37 per cent at the
end of the eleventh month, slightly down from 45.42 per cent a month earlier.
The market share of Pannon GSM slipped to 33.60 per cent from 33.79 per cent,
while that of Vodafone went up to 21.03 per cent from 20.79 per cent. According
to the NCA in the mobile segment in November there were 4,516 numbers carried
and 49,855 numbers carried in the first 11 months of the year. Since this
service was made available in May 2004, a total of 93,751 numbers was carried in
the mobile segment.
Magyar Telekom buys Dataplex
On December 12th, Magyar Telekom Rt announced the purchase of 100% of Dataplex
Kft from Beres Investment Rt for Ft 5.1bn (20.4m Euro). Dataplex is a major
provider of info-communications infrastructure outsourcing in Hungary, Budapest
Business Journal reported.
"This acquisition could result in significant growth and service portfolio
expansion for the Magyar Telekom Group in the wireline segment," said a
statement from the telecom giant. "Our business service offers will be
enriched with network solutions and value-added products such as high-security
storage and server hosting, while we can also exploit intra-group synergies in
technical and other operating areas."
Dataplex provides an organic growth opportunity for Magyar Telekom on the IT
services market, where its own capacities no longer suffice to fulfil the demand
of key business customers, the statement continued.
"In the market of business communication services, the number of business
customers requiring high-security, uninterrupted data storage, backup and other
value-added services is growing constantly," it said.
In January 2002, Beres Investment acquired the assets of the local affiliate of
now-defunct collocation provider CityReach International Ltd, for slightly more
than a third of the US$28m that was invested in setting up CityReach Hungary.
In 2005, Dataplex's revenues are expected to reach Ft 1.3bn, Magyar Telekom's
T-Online Data Park is providing primarily web and server hosting services for a
similar market segment; in this way, the telecom company says, the acquisition
of Dataplex fits into the strategy of the Magyar Telekom Group and enhances its