Bloomberg News

Hungary Audit Report Escalates Clash With Central Bank

February 13, 2013

Hungary’s State Audit Office said the central bank violated data-storage rules, escalating a clash with the Magyar Nemzeti Bank, which said the report may undermine the independent agency’s credibility.

The MNB’s data-storage practice has failed to meet regulations since 2009 and the central bank illegally shared data with the International Monetary Fund, the Budapest-based audit office said in an e-mailed report today. The central bank rejected the findings in a statement on its website.

The report escalated a clash between the two institutions after the central bank yesterday said the Audit Office interfered with the MNB’s independence by making recommendations on the management of foreign-currency reserves. The reports precede Premier Viktor Orban’s pick to replace MNB chief Andras Simor, whose six-year term ends March 3.

Orban’s ruling Fidesz party wants to summon Simor to a parliamentary committee hearing to discuss the report, MTI state news service reported today, citing Fidesz lawmaker Imre Puskas. The party earlier pushed for Simor’s removal before the end of his mandate.

The Audit Office, which like the central bank is an independent state institution, is headed by Laszlo Domokos, a former Fidesz lawmaker nominated by Orban in 2010.

Economy Minister Gyorgy Matolcsy, who spearheaded the government’s self-described unorthodox policies including nationalizing privately-managed pension fund assets and levying extraordinary industry taxes to close budget gaps, is the front- runner to succeed Simor, Nomura Holdings Plc and Standard Bank Group Ltd. said in reports yesterday after meeting with officials in Budapest.

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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