LONDON, May 15 (Reuters) - Following are comments from
policymakers from central and eastern Europe speaking at the
annual meeting of regional investment institution the European
Bank for Reconstruction and Development.
JULIA KIRALY, HUNGARIAN CENTRAL BANK VICE GOVERNOR
On exchange and interest rates:
"In the past six months, what we experienced was that there
was no significant capial outflow, what's more, in the banking
sector, part of the funding was increased. But you always have
to be cautious just because if you exaggerate the base rate
decrease, it will have an immediate negative effect on the
exchange rate, just because of the financing need of the
country."
"Compare the Hungarian CDS spread with other countries.
(...) Until our long-term macro economic policy is not reliable
and not credible we cannot decrease the base rate at a fast
rate."
"Our main objective is to get back onto the long-term
sustainable and financeable growth path so we so we are now
looking to after the crisis. And if we catch that train, it
means we can push immediately, but it depends on the credability
of the economic crisis."
On borrowing on markets: "The IMF has proven to be a good
pillar. The question is when the Hungarian government can enter
international markets again. From this point of view, the Czech
bond issue and the recent Polish bond issue was a good signal."
On Q1 GDP figures: "In comparison with other countries ...
for investors it was a positive surprise. It was in line with
the expectations that Hungary would see a significant downturn."
On inflation: "By the end of 2010 the inflation will be
below the 3 pct inflation rate target."
KAZAKH CENTRAL BANK GOVERNOR GRIGORY MARCHENKO
On chances of seeking IMF aid:
"If there is a third stage of (the) global financial crisis
it cannot be excluded but it is not part of the agenda now with
the current commodity prices. We are sure the authorities are
able to manage this...In the current situation, we are able to
cope ourselves and the measures taken are adequate."
On bank bailouts:
"The government has allocated $5 billion dollars (for bank
bailouts). The government believes that at the current stage
that is enough.
"Obviously, never say never. If the situation worsens and we
get a decrease in oil prices, then we do have a contingency
programme and then it's possible that there will be more
government support for systemically important banks."
CZECH CENTRAL BANK GOVERNOR ZDENEK TUMA
On rates:
"We see risks as balanced. Maybe things would evolve in such
a way that they could be balanced, so we would be closer to the
end of cutting. But on the other hand, things can evolve in one
direction, to the downside."
On Q1 GDP data:
"It's not to bad. We expected that there would be a hard hit
in the first quarter. We expect a leveling out in the
quarter-on-quarter figure. On the annual basis, we were close to
the consensus forecast, so it's slightly worse on an annual
basis (than our forecast)."
On lending:
"The level of non performing loans is going up. It certainly
not 10 (percent) at all. It's significantly below 10, even for
coroprates. And for households it's even lower. We have run
stress tests and... on three scenarios and they should be able
to withstand the pressure."
GEORGIAN PRIME MINISTER NIKA GILAURI
"We expect $1.3 billion FDI (foreign direct investment) this
year. Private investors are looking carefully that $4.5 billion
in donor pledges are realised. Private capital is now coming
back to Georgia following donor funding.
"We have been revising the (GDP forecast) figure -- the
worst case scenario would be minus one percent, between minus 1
to zero, something like that."
BANK OF ENGLAND BOARD MEMBER TIM BESLEY
"We're going through a period of really quite striking
deglobalisation in both goods and capital markets, and it's
impossible to know whether this is a temporary blip or the
beginning of a more protracted reversal. A lot of that depends
on a diagnosis of the underlying causes of those reversals,
which it's very early days to make a call on."
INTESA SANPAOLO CEE HEAD GEORGY SURANYI, FORMER HUNGARY
CENTRAL BANK GOVERNOR
"The difference in policy response (between central/eastern
Europe and developed economies) was striking. While Western
European countries responded with anti-cyclical monetary policy
but central european countries, because they had lost the
independence of central banks, neither fiscal nor monetary
authorities were able to respond anti-cyclically.
"Most of them, except perhaps the Czechs responded
pro-cyclically which will cause an even deeper recession (in
coming months). So without the real lender of last resort, I
don't see a solution for the region.
"The relationship (between eastern and western Europe) is so
close that if we withdraw significant amount of funds it would
be very detrimental to core countries of the EU as well. For
instance a quarter of German exports is directed to the region.
So if we withdraw it will be incomparably more difficult for
core countries, not only for the financial sector but also for
the economy as a whole."
ALGIRDAS SEMETA, LITHUANIAN FINANCE MINISTER
"We are in constant dialogue with international financial
institutions about policy, including the IMF. We don't reject a
time in the future when we make an application to the European
Commission."
Asked about the chances of seeking IMF aid, he said:
"Currently we are able to do it by our own."
"After the cuts we have made, we are coming for a (budget)
deficit of around 5 percent of GDP. But we are prepared to make
additional fiscal consolidation."
"Fortunately our banks meet all regulatory criteria as well
as adequacy requirements. the situation in our banking system is
stable. There is no bank that needs government assistance.
"We expect a change in economic trends in the second half of
next year and our current forecast shows in 2011 we could change
towards economic growth and current projections in 2011 show we
could expect growth approximately 4 percent.
RAIFFEISEN INTERNATIONAL <RIBH.VI> CEO HERBERT STEPIC
"I really doubt that many people in this room believe the
crisis is over. On the contrary I think this is the beginning of
the crisis of the real economy.
"We operate in all countries and frankly speaking, the
support of the western european governments, to offer banks
packages, that was key to the survival of the banking sector,
especially in emerging countries.
"The difficulty I found while talking to eastern european
counterparties -- they usually denied they had a problem --
almost all of them said 'we dont have a problem, we have a sound
economy, what we are talking about in financIng needs is
appropriate'. In reality in the end they all came to the IMF.
They started relatively late to take measures."
On bad loans: "We have reached across the industry 4-5
percent (of NPLs) at the moment. I'm pretty sure the number will
rise further."
NATIONAL BANK OF KAZAKHSTAN GOVERNOR GRIGORY MARCHENKO
"It has been presented as if Kazakhstan wants to introduce
legislation to impose capital controls. But we are not planning
to impose capital controls, in 2007 we joined the Article 8 of
the IMF on the capital account. In February we devalued the
tenge and in the past month we have been buying dollars. When
you don't need to defend the exchange rate why should you impose
capital controls?"
CZECH CENTRAL BANK GOVERNOR ZDENEK TUMA
On euro:
"The euro as such is not a panacea... Monetary policy cannot
resolve structural issues of the economy.
"I don't think that (euro adoption) is a general
prescription for countries in the region... Speaking for
instance about the Baltic countries, the euro tomorrow would be
a solution. It would be the cheapest way to help those
countries."
On the Czech crown:
"In the short term, the depreciation of the Czech crown
would be supportive of Czech exporters at the moment and
hopefully it would help us smooth out the present crisis.
"On the other hand, the euro is considered the safe shelter
and regarding the debt service, the Slovaks borrow cheaper than
the Czechs at this moment."
"Obviously I was concerned over the crown's volatility ...
But the situation has calmed down as compared to a month ago. We
have a certain advantage in that we didn't borrow in foreign
currencies, so we are sensitative from the point of view of
exporters but not from the ponit of view of debt servicing and
households."
(Compiled by Patrick Graham, London Treasury Desk +44 207
542 4441)
