Hungary's Euro Adoption Path Requires Strong Political Dedication

Hungary's central bank governor, Mihály Varga, emphasized that while meeting the Maastricht criteria is necessary for adopting the euro, it is not a guarantee of economic success. Speaking at the Economists' Itinerant Conference in Eger, Varga stressed that the introduction of the common European currency should be done gradually and successfully, with an emphasis on sustainable economic development.

Varga recalled that Hungary committed to adopting the euro when it joined the EU in 2004, but its political commitment has shifted over time. In the 2020s, the country is now entering a new phase with strong political dedication, accompanied by favourable investor sentiment and improved market expectations.

According to Varga, Hungary's inflation data will meet the reference value in 2026, and the forint has become one of the best-performing emerging market currencies in the world. However, the country is facing a more difficult economic growth environment than those that joined earlier, with its problem being low growth rather than high inflation.

Varga highlighted the benefits of euro adoption, including a predictable exchange rate and improved trade relations with eurozone countries, which account for nearly 59 percent of Hungarian exports. However, he also noted that reducing the country's budget deficit is crucial for adopting the euro, as it currently stands at more than twice the Maastricht criterion of 3 percent.