(CNN) -- Hungary -- whose economy is shrinking amid
political wrangling -- has been vindicated for its use of
"unconventional" policies and has emerged from crisis, its finance
minister says.
Gyorgy Matolcsy has
overseen an economy that contracted 1.3% in the first quarter of this
year, the worst performance in the European Union. However, it is
expected to meet its 2012 budget deficit target of 2.5% of GDP, and
Matolcsy said the country's "crisis is over."
Matolcsy said the country
had to implement a series of "unconventional economic policy measures"
to bring down the deficit, including one-off levies and the effective
nationalization of private pensions.
The EU has lambasted the
measures as unsustainable, but Matolcsy said such moves are "the
future." The country was "forced to be innovative and creative," he
added.
The EU froze €495 million
of development funds for 2013 in response to the policies, but last
month proposed lifting these sanctions as it felt the country was taking
the right action to tackle its deficit. A meeting of EU finance
ministers is expected to make a final decision later this month.
Matolcsy said the moves
may have been unusual, but had led to "growth, jobs and creativity." The
EU "badly needed" some creativity, he said.
Friction remains between
the Hungarian government and its lenders, the EU and International
Monetary Fund, over additional funds. The main sticking point is a law
passed last year that the EU, European Central Bank and International
Monetary Fund believe jeopardizes the independence of Hungary's central
bank, the Magyar Nemzeti Bank.
The law paved the way to
an increase in council members and deputy governors, along with a new
president who would have authority over the bank's governor. The plans
raised concerns the bank's independent decision-making process could be
undermined.
The Hungarian parliament
delayed a vote on amendments to the law this week after the ECB
indicated that the changes had not gone far enough.
Despite the pushback,
Matolcsy is confident on Hungary's future. "The whole central European
region will be the next hub for the global business community", he said.
"It will be a region between Europe and Asia, between the States and
the EU."
He added: "It is the next emerging region and you can find Hungary at its heart."
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