Hungary to think again on central bank pay

BUDAPEST: Hungary's ruling Fidesz party plans to partially reverse pay cuts at the central bank because it is struggling to fill vacancies for official interest rate-setters, news portal Index.hu said on Wednesday.

The government is facing difficulty in finding suitable candidates for the four vacant positions on the rate setting Monetary Council partly because the pay offered was not really competitive after last year's cut, it said.

A spokeswoman for Fidesz MP Antal Rogan confirmed to Reuters that the government was planning to raise the salaries of rate setters.

Rogan heads parliament's economic committee which needs to pick the four new council members, but has not named any candidates yet.

Last year Fidesz -- which has repeatedly attacked central bank Governor Andras Simor -- passed legislation to cap salaries at 2 million forints ($10,190) per month in the public sector, effectively cutting Simor's salary by 75 percent, and also cutting pay for his two deputies.

The cut, however, also brought a reduction in rate setters' salaries which are set at 35 percent of the governor's salary, reducing the job's appeal, Index said.

Rate setters earn gross 700,000 forints ($3,567) per month now.

The central bank does not have a working Monetary Council right now as the mandates of four out of seven rate setters expired on Tuesday and parliament is expected to elect the new members on Mar. 7.

The central bank declined to comment on the issue.

Last month parliament passed government-sponsored legislation that strips Simor of the right to nominate two of the four new members and leaves appointing all new rate setters to the discretion of Parliament, where Fidesz has a two-thirds majority.

The government has criticised the bank's recent interest rate hikes but Prime Minister Viktor Orban said last month that the new members would not act with haste to ease policy.

The European Central Bank, whose own independence is enshrined in European Union law, has spoken out against the new Hungarian appointment rules and pay cuts.