In the last week quite a few articles appeared in the Hungarian press in which it was reported that György Matolcsy might be in trouble. The question is how much trouble. Some time ago (it may have been in a comment) I suggested that with all the financial troubles Hungary has run into lately perhaps the smartest thing would be to fire Matolcsy. With a new man who has the trust of the financial community it might be easier to start afresh. For example, to begin negotiations for another IMF loan that according to most analysts Hungary most likely will need. Of course, it is possible that these brilliant economic moves actually come from the chief and that Matolcsy is only executing orders from above. But even in that case, by sacking Matolcsy Orbán could save his own hide.
The first hint of trouble in the Ministry of National Economy (Nemzetgazdasági Minisztérium) stemmed from a serious difference of opinion between Matolcsy's ministry and Deputy Prime Minister Tibor Navracsics's Ministry of Administration and Justice (Közigazgatási és Igazságügyi Minisztérium) concerning forty-one high positions. In Navracsics's opinion Matolcsy was not entitled to make these appointments. The right belongs to a newly created center under Navracsics's ministry that decides on the hiring of civil servants. The result is that these positions remain unfilled.
A few days later there was another problem between Matolcsy and, this time, the Foreign Ministry (Külügyminisztérium). Matolcsy decided to sack all the members of the Hungarian secretariat that has the important job of keeping in touch with the Economic and Financial Affairs Council (Ecofin) in Brussels. The reason: the organization must reflect more closely the new governmental structure. The problem is that members of the secretariat are employees of the Foreign Ministry. My understanding is that János Martonyi didn't appreciate Matolcsy's unilateral action.
There are rumblings within the walls of the Ministry of National Economy as well. One cause of strife is that apparently the staff of the former Finance Ministry finds its new position in the mammoth ministry of György Matolcsy less than satisfactory. Newspapermen became suspicious when they heard that Ferenc Bathó, assistant undersecretary and the person most familiar with the details of the budget, suddenly went on a holiday. A few weeks before the budget must be presented to parliament. Apparently this leave wasn't voluntary. According to information received by Index, Matolcsy told György Naszvadi, undersecretary in charge of the budget, that "Bathó's days are numbered," although by all reports Bathó has been the real brains behind the budget ever since 1994. Surely, Matolcsy shouldn't get rid of important and knowledgeable civil servants. He has enough trouble without firing loyal employees.
Népszabadság learned from several independent sources that there is "a crack" in the relationship between the budgetary unit led by György Naszvadi and Matolcsy and that it is not Naszvadi's position that is in jeopardy but Matolcsy's. Matolcsy's activities to date have been controversial. According to the latest opinion poll even Fidesz supporters have their doubts about the wisdom of fighting with the IMF and the EU. Economists, even those who sympathized with the party, are skeptical about the course Matolcsy is taking. Perhaps the most important of these was Tamás Mellár, who criticized some of the economic decisions of the new government. Mellár is on the staff of Századvég's economic think tank, a decidedly Fidesz-oriented institution.
In addition, the everyday workings of the ministry leave something to be desired. Urgent plans don't get off the ground. And, of course, there is the budget on which a lot depends. Perhaps the whole future of the Orbán government. If the budget doesn't meet the approval of the market Orbán might be in serious trouble. Getting rid of the staff responsible for putting the budget together seems suicidal. But at the same time sacking Matolcsy would be an admission of the failure of the Orbán government's economic policy.
If Matolcsy is replaced, Orbán must make sure that his successor is a man who is familiar with the business world and enjoys the trust of financial circles. According to rumors that man might be Zsolt Hernádi, currently CEO of MOL, the Hungarian oil refining company. Hernádi between 1989 and 1994 occupied various posts at different commercial banks. He was CEO of the Central Bank of Hungarian Savings Cooperatives between 1994 and 2001 and a member of its Board of Directors between 1994 and 2002. Between 1995 and 2001 Hernádi was a board member of the Hungarian Banking Association. According to the staff writer of Népszabadság responsible for economic matters, Hernádi might be better as head of the other "economic ministry," the Ministry of National Development. However, lately there have been rumors that István Kocsis, currently CEO of BKV, the Budapest Transit Authority, will be moving over to MOL. He denies it, but who knows? Maybe there is something in all these whisperings.