Friday, 24 March 1995
Volume 2, Issue 60
BUSINESS NEWS
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**BUDAPEST EASES BUSINESS CURRENCY RULES**
The Hungarian government is going to let companies keep hard
currency bank accounts beginning next month. Currently, firms
doing business in Hungary have to convert their hard currency
earnings and business loans into forints, if they want to keep
the money in the country. The new rules are part of the short
term economic package the government unveiled March 12.
They'll enable companies to avoid currency conversion losses.
The government plans monthly forint devaluations through the
rest of the year.
ANALYSIS
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**HUNGARIANS WORRY ABOUT SOCIAL BENEFIT CUTS**
Interview with Gyorgy Kocsis, economics editor of the Hungarian
economic weekly HVG.
By Duncan Shiels
What galvanized the thousands of students who protested
Wednesday across Hungary was a government plan to introduce a
$16-a-month tuition fee for college students. The fee is one
of several austerity measures, which still have to be approved
by parliament, aimed at reducing Hungary's soaring budget
deficit while stemming the rise in imports and stimulating
exports. Among other things, maternity benefits, which used
to be automatic, would be based on need. Two Socialist
ministers have resigned over the austerity measures,
predicting what they called "undesireable passions" in
society. Kocsis attaches particular significance to the
scrapping of automatic maternity benefits.
Kocsis: I think this is the most interesting and the most
difficult step in the Hungarian economy since maybe 1990, and
I like to say that this is the moment when, or the months when,
Socialism has really come to an end in Hungary. So I think
the impact of these kind of steps is almost as big as
privatization, because it changes a basic sort of agreement in
society, an unwritten agreement.
CET: But of course is this automatic, I think it's 90 percent
of your salary for two years, for which everyone is eligible?
Kocsis: 75 per cent of your salary for two years and 7,500
forints one more year, until your child gets three years old.
CET: Now that's a very generous allowance, isn't it?
Kocsis: Well, compared to the means of the country at least,
it is, yes. It has been introduced in 1968 and changed during
the times and I think it was really, as you said, a very
generous social network, but very unfit to the financial means
of the country, especially later. So this is one thing where
the big debt, $27 billion of debt, comes from. But it's very
difficult to explain to the people.
CET: The welfare minister Pal Kovacs and the head of the secret
services Bela Katona both resigned saying that it was
ill-prepared. Do you agree with them that not enough thought
has gone into some of these measures?
Kocsis: Yes, I think that some of these measures cannot be
really explained. I mean of course you can explain everything
that you have to cut the budget deficit and it's the only
explanation, but if you give a little more thought to the
details, then some parts of this package are very difficult to
explain.
CET: Coming on to the last one, the student fees. This is
perhaps the one that's the most puzzling because the students
are having to pay 2,000 forints a month, $16 a month, towards
their own tuition. According to Central Statistical Office
figures, each student costs 340,000 forints, $2,800 a year to
be educated. So the saving involved in this measure seems
very small compared to the unrest it's already caused. On
Wednesday, we had this demonstration of the students. What's
the thinking behind this measure? Because it's not really
going to bring in a great deal of money.
Kocsis: I think the significance of this is to break a
psychological barrier; that somebody is to pay for their
studies. Looking at the students' demonstrating, my impression
was, my personal impression, especially those in Budapest who
went to demonstarte in front of the Financial Ministry, it
didn't come from really desperation. It was sort of a fun for
the kids.
CET: What about the trade unions, then? Will there be unrest
elsewhere in society, particularly over these social benefits
that are being lost?
Kocsis: I don't think so, because the trade unions are very
weak, they are fractioned, they have arguments between each
other, and also there is this strange situation that the
biggest trade union is incorporated into the governing
Socialist Party
CET: But there will be hardship?
Kocsis: Of course.
CET: And you just think it will be accepted by the population?
Kocsis: Of course, the people don't already feel everything,
it's only an announcement, most of it it's announcement, but
it's going to come month by month. And also some other steps
could be taken which we don't know yet, but otherwise I think
Hungarians have learned to accept these hardships.
ABOUT CET ON-LINE
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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.
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Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.
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date=3/23/95
type=correspondent report
number=2-175943
Title=E. Euro Markets
byline=Barry Wood
dateline=Prague
content=
voiced at:
Intro: Stock trading in post-communist Europe is a new
phenomenon and the fragile exchanges for trading shares in
privatized companies are having problems. V-o-A's Barry Wood
reports on a capital markets conference in Prague that discussed
some of those problems.
Text: The biggest problem now afflicting East European stock
markets is how to stop a relentless price decline. The markets in
Warsaw, Prague and Budapest peaked in February of last year and
have been falling ever since. The declines have accelerated
since January when the Mexican financial crisis caused big
institutional investors to turn cautious about all emerging stock
markets.
The Warsaw stock market reopened for business in 1991 after a 52
year closure. The Prague exchange, which operated under German
occupation throughout World War Two, reopened in 1993. Even
though Poland's economy is twice the size of the Czech and
Hungarian economies combined, only 50 corporate shares are traded
on the Warsaw exchange. Trading volume however is about equal to
that of Prague where 14-hundred shares are traded.
The Warsaw exchange is given high marks for being honest and well
regulated. Marek Wierzbowski is a lawyer who helped set up
Warsaw's Independent Agency which regulates the stock market.
// Wierzbowski act //
Our securities commission assures first of all the
transparency of the market. All information (on
companies) needed for investors is published and
delivered to the public. And penalties for any attempt
to hide information are extremely severe.
// End act //
By contrast, brokers complain about the lack of transparency in
the Czech stock market. Companies are not compelled to publish
much information. And up to 70 percent of share trading takes
place off the exchange, at the securities center where share
ownership is registered. The securities center has only recently
begun to publish trading information.
In the Prague market, banks play a dominant role. Big commercial
banks have set up investment funds which are major traders on the
market. The funds are major owners of corporations which have
large debts to those same commercial banks. Richard Salzmann,
the chairman of Prague's largest bank (Komercni), says the banks
don't really control the funds.
// Salzmann act //
You may believe there are secret links between those
entities. I will tell you there aren't. You have to
trust it or not. So it is arranged that way in this
country. On a market, as I mentioned, that is two years
old (only).
// End act //
Mr. Salzmann says this perceived conflict of interest will be
resolved as the Prague stock exchange matures. The Czech
authorities are attempting to improve securities regulation and
make trading fully transparent. (Signed)
neb/bdw/mh/cf
23-Mar-95 9:44 am est (1444 utc)
nnnn
source: Voice of America
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A tovabbterjesztest a New York-i szekhelyu Magyar Emberi Jogok
Alapitvany tamogatja.
[*] [*] [*] [*] [*][*] [*][*][*]
[*] [*] [*] [*] [*] [*] [*]
[*][*][*] [*][*][*] [*][*] [*][*]
[*] [*] [*] [*] [*] [*] [*]
[*] [*] [*] [*] [*] [*] [*]
Reposting is supported by Hungarian Human Rights Foundation News
and Information Service.
*****************************************************************
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