Hungary fin min expects good teamwork with c.bank

Mr Varga will take over the post of Finance Minister from January 2001. Mr Jarai will replace Gyorgy Suranyi at the helm of the National Bank of Hungary in March, when Mr Suranyi's six-year mandate comes to an end. "I am not trying to circumvent disputes, which will be inevitable between the National Bank and the Finance Ministry, but I believe we can come to compromise agreements with the help of coordinated and successful work at the finance ministry", Mr Varga explained. "I will try to provide the necessary support to promote the attractiveness of the Budapest Stock Exchange (BSE) to investors", Mr Varga noted.

Mr Varga added that there may be tax-incentives to draw new companies onto the bourse, but there has not been a final decision on the issue. Mr Varga emphasized, that mandatory stock exchange listing has not been a success and many analysts are of the view that luring companies onto the stock market via tax allowances may not be considered the best possible incentive.

Mr Varga has not shared the gloomy forecasts of many economic researchers concerning smaller investment volume growth, which has slumped behind forecasts, adding that 2001 will mark the start of several large-scale public investments, seriously boosting the investment volume. Foreign direct investment was heavier this year than a year ago, totaling around EUR 1bn so far, Mr Varga noted, adding that there is no reason to worry. Mr Varga does not believe the scale of portfolio selloffs from FDI investments could give grounds for worries, pointing out that capital outflow had showed volatility in previous years, which may suggest that investors decisions are not unanimously rational at some point. It is not necessarily a bad sign that a portion of hot money leaves the country, Mr Varga added. There is no doubt the Finance Ministry will strictly supervise the Health Insurance Funds, which will be moved put under the control of the Ministry of Health next year.