Viktor Orbán's governments love making plans, and if there are plans they have to be named after historical figures. In fact sometimes the name comes first and only afterward the details of the plan. This is the case with the Semmelweis Plan, named after Ignác Semmelweis (1818-1865) who found that the unclean hands of physicians had something to do with puerperal fever. The name is in place, but the plan that is supposed to fix the ills of Hungarian healthcare is very hazy.
István Széchenyi (1791-1860) has been always a favorite of Hungarian conservatives, mainly because he was juxtaposed against Lajos Kossuth (1802-1894), the revolutionary nationalist. Széchenyi's priority was not independence from Austria but rather the country's economic development. Thus he was very much in favor between the two world wars, whereas after 1945 the darling of the regimes was Kossuth. It was no surprise that during the first Orbán government György Matolcsy's economic stimulus plan was named after Széchenyi. Last year György Matolcsy and Viktor Orbán jointly announced the launch of the New Széchenyi Plan. The first Széchenyi Plan actually had relatively little influence on Hungarian economic growth and I very much doubt that the new plan will be any more effective.
And now we have the Kálmán Széll Plan that allegedly will dramatically lower Hungary's sovereign debt and will usher in a spectacular economic boom. Although few people probably remember Kálmán Széll's name from their studies of Hungarian history in the eleventh grade, Széll (1843-1915) was a much heralded minister of finance (1875-1878) and later a greatly respected prime minister (1899-1903).
The Széll Plan is the Orbán government's answer to the demands of the international markets to improve the precarious economic and financial situation of the country. Although Viktor Orbán while in opposition promised a bright future without any belt tightening, after nine months in office he had to admit that without a serious structural reorganization there can be no sustainable economic growth. The question was how to package this austerity program without calling it austerity. Thus was born the Kálmán Széll Plan for the Reduction of the Sovereign Debt. Like the first attempt at appeasing the European Union in June 2010, this is a numbered list. The first program had twenty-nine points, including such key decisions as permitting the brewing of pálinka at home. This new program has only twenty-six points.
What can I say about the Kálmán Széll Plan? Most of it is as advertised, simply a plan for promised future action. Admittedly, the first point is a concrete change, however modest. From here on ministers will have shorter vacations: instead of two months, only one. In the second point they promise that by July 1 they will work out the details of a freeze on current expenses of the state bureaucracy. But wait a minute, I remember that they promised that already in June 2010. In fact, they promised that they would save 15% on salaries. Of course, we know that in fact the expenses of the government have grown since Viktor Orbán became prime minister.
Similar promises are made about changes in public works programs, disability payments, early retirement, sick pay, drug subsidies. All by July 1. By September 1 they will enact new laws concerning public and higher education. By December 1 they will have put the whole system of social security on a new footing. By the end of the year they will completely restructure the debt load of the Hungarian State Railroad. Then a new world will await the population on January 1, 2012, when all these preparations will be translated into action: a new system of pensions, a new system of public works, and a new system of public transportation. The laundry list sometimes gets a bit confused over tenses: point 21 mentions the freezing of subsidies for parties at the 2011 level, but that freeze, to the best of my knowledge, already took place. Some numbers are serious political targets: in 2014 there will be a parliament of only 200 members!
There are some rather disappointing announcements. First, the extra levy on the banks will continue at the same rate for three years. The government promised earlier that in 2013-2014 business taxes would be lowered from 19 to 10 percent. Well, they will not. Instead there are new, totally unsupported promises of a bright economic future for Hungary. By 2014 the national debt will be only 65-70% of the GDP as opposed to the current 80%. According to the ever optimistic Matolcsy, with the help of the Kálmán Széll Plan and the New Széchenyi Plan there will be an economic growth of 4-6 percent a year. With this spectacular growth there will be 300,000 new jobs created. The Hungarian economic miracle will be "an breakthrough in economic history."
Not surprisingly, investors and analysts were hoping for something more concrete. The reaction was immediate. The yield on government notes due February 2015 climbed 12 basis points. And although it was a weak day across the board for European bourses, Hungary's performance was about twice as bad. London analysts considered the Kálmán Széll Plan vague on the expenditure side and "the timing of the implementation is also not clear." According to Ilan Solot, emerging-markets strategist at Brown Brothers Harriman in London, the Hungarian government's "plans seem to focus on tax hikes rather than spending cuts … and unless more details on spending cuts are announced, the forint will be vulnerable."
Foreign analysts complain that "the government keeps promising big announcements all the time and then fails to deliver." Unfortunately Matolcsy is no Kálmán Széll.