Hungary’s Orbán Nominates Ex-Finance Chief Varga to Lead Hungary’s Central Bank, Investors Watch Closely

Hungarian Prime Minister Viktor Orbán has nominated longtime Finance Minister Mihály Varga to lead the National Bank of Hungary (MNB), Bloomberg reports.

The announcement, made Friday on state radio, revealed that Varga will succeed Governor György Matolcsy in March, when Matolcsy’s second term concludes. Orbán praised Varga as “the most predictable and level-headed person,” highlighting his extensive experience in economic policy. The Prime Minister also hinted at appointing Marton Nagy, the current economy minister, to a combined “superministry” overseeing economic policy, although this was not formally confirmed.

The forint, Hungary’s currency, reacted positively to the news, gaining 0.3% against the euro after briefly hitting a two-year low the previous day. The appointments come at a critical juncture for Hungary’s economy, which is currently in recession, with the forint trading near a two-year low. Concerns remain about the government’s ability to implement stimulus measures without further straining the already burdened national budget.

Varga’s stance on economic policy has been a source of ambiguity for investors. While advocating fiscal conservatism, he has served under Orbán’s governments which have increasingly adopted expansive spending policies, particularly in the wake of the COVID-19 pandemic. His influence has reportedly diminished in recent years, overshadowed by Nagy, a proponent of significant government intervention in the economy.