7days, 2005. február 21

7/28/2019 7Days, 2005. február 21.

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14 February 2005 Business OTP Group net income up 68%

TVK net profit up 71% in 2004MOL Q4 operating profit soarsMichelin opts for Poland Antenna posts Ft 11.6 bln net profitNabi Q4 loss widens on job-cut chargesBSE shares to be traded at BSEK and H Bank profit up 135% in 2004Borsodchem profit surges in Q4

BKV workers set to strikeElectric earnings from Elm? and ÉmászMFB to pay dividend this year Matáv posts Q4 loss on competitionThree banks' interest rates declineRába returns to profitHVB more than doubles on '04Malév EGM approves new chairman and CEOZalakerámia closes with a lossFotex takes a 75% lossIEB profit up 18%Bank Gutmann establishes investment officeFHB up 75%Linamar profits up despite falling sales

Economics GKI projects slowing investment growth

Project subsidies ÁAK set to sell more highway stickers

Politics Hungarians stand divided over WWII battleDomestic Eastern Euro Catholic leaders in Bp15 February 2005 Business MKB posts after-tax profit of Ft 14.791 bln

Pannonplast Q4 loss narrowsErste Bank profit after PostabankRaiffeisen posts profit of Ft 11.247 blnCIB Bank consolidated profit up 80%Budapest Bank offers consolidated loan AÉB posts after-tax profit of Ft 17.426 blnOTP planning Ft 146/share dividend Arago posts losses of Ft 3.24 bln

Brau Union reports after-tax profit of Ft 909.2 millionDanubius Hotels profits rise to Ft 1.37 billion Agrimill-Agrimpex posts losseseconet.hu posts after-tax profit of Ft 26.43 mlnGraphisoft secures Euro 5.1 mln profitDomus reports profit of Ft 9 mln in 2004Globus posts losses of Ft 817 mln last year Savings coops report after-tax profit of Ft 8.9 blnGardenia posts 2004 profit because of falling costs Airlines to pay damages for delaysMotorway co angles for Ft 125 bln loan

Economics Inflation 4.47% in JanPolitics PM’s speech full of promise

Cultural Minister takes oath

Fidesz proposes tax cutsDomestic Minardi-Baumgartner talks stopFarmers demonstrate on Thursday

16 February 2005 Business CIB Credit reports net profit of Ft 2 bln

Phylaxia-Pharma had losses of Ft 29 mlnEco-friendly batteries from Jász-PlasztikMOL fined $46 mln on fuel pricingSkoglund posts losses of Ft 50.3 mlnHumet posts losses of Ft 139.4 mlnFHB expects Ft 11 billion profit in Q1PSzÁF starts registry for ins. brokersCopying fee angers printer importersGVOP subsidies total Ft 45.5 bln

Le Belier to cut costsMatáv publishes fresh ownership structureHyundai Motor aims for 10,000 cars in 2007Tranzit rents space in Corvin

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7/28/2019 7Days, 2005. február 21.



Levi’s embarking on aggressive expansionNTK predicts Ft 4.5 bln revenue

Economics FinMin raises Q1 fiscal deficit forecast by Ft 45.9 blnDecember industrial output down 1.4% yr/yr EU urges Hungary to cut deficit further Chamber of Commerce Head calls for real tax cutsBudapest council budget proposalBUX and earnings rose in tandem last year

Politics Committees give green light to bill on informersDomestic Holocaust film attracts record number to cinemas

EduMin starts scholarships for teensRadio protest removes offensive computer game

17 February 2005 Business Real wages down 1% in 2004

Rába secures Ft 10 bln military tender BUX Has Biggest Gain in 9 MonthsMOL to pay bigger dividend this year Sláger Radio ad revenue grows 42%New Hyundai importing firm establishedFHB buys own stocksSzéchenyi card set to offer new servicesMol eyeing majority stake in INAPannon pre-tax profit of Ft 33.5 blnPaks denies nuclear waste rumoursDuna TV set to nominate new president

Vanreusel Snack to build in MórahalomMasterCard on the upHunguest reports losses

Economics Tax office chief resignsDraskovics confident EU will approve policiesLeasing market growth almost halvedK and H SME confidence index downFarmers granted years gracePSzáF fines Groupama, MÁV InsuranceJan inflation rate may match Poland's

Politics Hungary, Russia sign agreementsPeople pessimistic

Domestic 64 priests- secret agents, historian says18 February 2005

Business Bonds highest gain in worldOTP has been rallying for daysRaiffeisen net profit of Ft 16 blnViasat losses despite high revenuesBrau profit down by 60%Union’s good year HTCC takes out loan for PanTelElectricity workers threaten strikeProtesting pig farmers

Economics Low Jan inflation aided by food pricesEU recommendations on budget agreedFinMin proposes fast comparison of taxPlenty of steam left in Bp marketNA Rt takes out larger loan

OECD to set up regional training center Sub-regions look to double state subsidyInvestment fund assets up 4.1% in Jan

Politics Gov’t: Orbán’s tax scheme would mean lossesPutin promises to hand back booksPM, rival held back plenty

Domestic Roma situation worsening‘Drug users need treatment not sanctions’Hungarian Gripen takes to the skiesX-ray bus arrives in Hungary

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14 February 2005 Business

OTP Group net income up 68%OTP Bank Group had consolidated after-tax profit of Ft 140 billion in 2004, 68% more than a year earlier, the bank's IFRS report says. The profit is above market expectations. OTP Bank's non-consolidated after-tax profit soared 81.8% to Ft 127.5 billion. Consolidated total assets of the grouprose 20.4% to Ft 4,166 billion. (Econews)

TVK net profit up 71% in 2004Chemicals company TVK Rt reported its net profit increased 71% to Ft 9.02 billion in 2004, comparedto the previous year, according to its consolidated IFRS report, published on Friday. In Q4 alone, TVKhad consolidated net profit of Ft 2.32 billion, up 12% from a year earlier. Last year revenue rose 17%yr/yr to Ft 175.94 billion. Q4 sales were up 20% yr/yr at Ft 47.83 billion. The parent company accountedfor 93% of the rise in both consolidated sales and profit. Exports accounted for 45% of sales, down 1percentage point from a year before. EBITDA rose 60% to Ft 19.14 billion, while operating profit almosttrebled to Ft 12.21 billion. (Econews; NG 10)

MOL Q4 operating profit soarsHungary's MOL Rt said fourth-quarter profit rose more than expected as refining margins grew andprofitability at a gas unit improved. Operating profit more than doubled to Ft 59.5 billion in the fourth

quarter, from Ft 26 billion a year earlier, Budapest-based MOL said in an e-mail statement. Net incomefell 4 % to Ft 55.2 billion because of provisions announced earlier. MOL benefited from a growingdifference in the price of Brent crude and lower-quality Russian oil, which the company's refineries arecapable of processing after upgrades in the past five years. (Bloomberg; NG 7, Sat MH 13)

Michelin opts for Poland Having concluded talks that lasted almost a year, French tire manufacturer Michelin preferred thePolish town of Olsztyn to Nyíregyháza, northeastern Hungary, as the location for a Euro 500 milliongreenfield investment, a company spokesperson announced in Warsaw. The new manufacturing plantwill be built in the industrial park of Olsztyn, northeastern Poland, creating 500 jobs in the center of aregion with 29.4% unemployment. (NG 1) P.P.

Antenna posts Ft 11.6 bln net profit

Terrestrial broadcaster Antenna Hungária Rt recorded net profit of Ft 11.58 billion in 2004, up from netlosses of Ft 1.08 billion a year earlier, according to the company's consolidated annual report, preparedusing Hungarian Accounting Standards and published Friday. Almost all of Antenna Hungária's profitcame from Ft 11.34 billion in gross financial revenue from the sale of its stake in Vodafone's Hungarianunit. Operating profit dropped 63.3%. Antenna Hungária had unconsolidated net profit of Ft 1.27 billionin 2004, and unconsolidated pre-tax profit of Ft 1.52 billion. (Econews; NG 7)

Nabi Q4 loss widens on job-cut chargesHungary's Nabi Bus Industries Rt, the third-largest supplier of city buses in the U.S., reported its fourth-quarter loss widened eightfold after taking charges to cover expenses related to job cuts and other cost-reduction measures. The loss totaled USD 45 million, compared with a USD 5.35 million loss ayear earlier, according to Bloomberg calculations from full- year results provided by the company in the

Budapest Stock Exchange's gazette. Sales rose 3.8 % to USD 103.47 million in the quarter. Nabi,which has plants in Leeds, England, and Anniston, Alabama, and two factories in Hungary, will ceaseproduction of a newly developed fiberglass model, known as Compobus, after meeting existing ordersas it lost an exemption from the 'Buy American Act'. (Bloomberg; NG 9, MH 12)

BSE shares to be traded at BSE Budapest Stock Exchange (BSE) Rt will introduce the trading of its own shares this September,chairman of BSE Attila Szalay-Berzeviczy said. Specialists say BSE shares have a good chance to betraded well there. The proposal on share issue must receive the approval of 75% of BSE's owners,Szalay-Berzeviczy said. Investors said that BSE was worth Ft 12 billion at the end of last year. After theshare issue, BSE may be able to buy a 53.4% stake of Keler Rt from the National Bank of Hungary.(BBJ 1) M.K.

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K and H Bank profit up 135% in 2004K and H Bank Rt had consolidated after-tax profit of Ft 18.991 billion in 2004, according to IFRS, up135% from a year before. K and H Bank had consolidated total assets of Ft 1,733billion, up 21% fromthe end of 2003. K and H Bank set aside provisions of Ft 3.7 billion last year for losses resulting fromthe scandal at K and H Equities in 2003. In 2003, K and H Bank set aside provisions of Ft 8.6 billion,halving profits. Pre-tax profit was Ft 23.2 billion, up from Ft 9.7 billion in 2003. Total revenue frombanking operations rose 18.6% to Ft 98.7 billion, and operating profit rose 38.1% to Ft 30.9 billion.Without provisioning against the K and H Equities losses, pre-tax profits would have risen 47% to Ft

26.9 billion in 2004, and net profit would have come to Ft 22.1 billion, rising 45%, the bank noted.(Econews; Sat MH 11)

Borsodchem profit surges in Q4Borsodchem Rt, the largest maker of PVC plastic in eastern Europe, said profit surged almost 18 timesin the fourth quarter on rising demand for its main products. Net income soared to Ft 4.3 billion,compared with Ft 242 million in the year-earlier period. Bloomberg News calculated quarterly figures bysubtracting nine- month data from annual results reported today by Borsodchem. Borsodchem, basedin Kazincbarcika, Hungary, benefited from rising demand for its three main products: PVC, used inproducts from floor tiles to waterproof clothing, and MDI and TDI, two plastic foams used in constructionand the auto industry. (Bloomberg; NG 9)

BKV workers set to strike

A strike by Budapest transport workers tomorrow appears increasingly probable after unions rejected acompany wage offer of 7 % on Friday. Budapest Transport Company BKV Rt has said it could notafford the 11 % pay hike unions are demanding, but upped its original 6 % offer by a percentage point.Unions responded with a thumbs down. Meanwhile, BKV CEO Botond Aba said that a Budapest courthad rejected their request that workers be forced to provide minimal services as a vital enterprise, so if the strike goes ahead, all public transport comes to a halt. The unions have said their workers wouldwalk off the job as of 4 a.m. on Tuesday and stay off until 1 p.m. (MTI; Nv 1, MH 6, Nb 7)

Electric earnings from Elm? and Émász Regional power distributors Elm? Rt and Émász Rt, both majority owned by German electricity giantRWE Energy AG, justified investor expectations with their 2004 earnings reports this weekend. Elm?,active in Budapest and its environs, posted nearly Ft 16 billion after-tax profit, which translates into Ft

2.630 return on each stock. Its revenues totaled Ft 200 billion, up on Ft 187 billion yr/yr. Émász, whichdistributes electricity in northern Hungary with a higher rate of corporate clients than Elm? does, postedFt 3.4 billion after-tax profit and Ft 1.110 return per stock. Both companies reported a decline in thevolume of sales, which is currently typical in the entire the sector due to the ongoing process of marketliberalization. Elm? sold 8,346 GWh of electricity, 17% less than in 2003, while Émász sales totaled3,270 GWh, down 14% yr/yr. (NG 8) P.P.

MFB to pay dividend this year Improving on its 2003 net income by 40%, state-owned Hungarian Development Bank (MFB) said ithad Ft 11.79 billion after-tax profit in 2004. The bank's interest rate income totaled Ft 42.24 billion,which marks substantial growth compared to 2003's Ft 38.48 billion. MFB's net assets stood at Ft606.23 billion at the end of 2004, up 13.5% on the previous annual report. While the bank did not pay a

dividend on 2003 profit, the management is proposing to pay a total of Ft 6 billion to shareholders thistime.(BBJ on line)

Matáv posts Q4 loss on competitionHungarian telco Matáv Rt, Eastern Europe's 2nd largest phone company, posted a fourth- quarter lossas rising sales at the mobile business failed to make up for falling fixed-line revenue. The loss was Ft6.45 billion, compared with a profit of Ft 5.69 billion a year earlier, Matáv said in a statement on its Website. (Bloomberg; Sat MH 13, NG 7)

Three banks' interest rates declineFollowing the National Bank of Hungary (MNB)'s decision to cut the base interest rate by 50 basispoints three weeks ago, several banks have cut the interest rates of corporate and retail accounts as of today. The current 9% base interest rate is by 3.5% less than a year ago. Inter-Európa Bank Rt has cut

its retail account interest rate by half a per cent, while K and H Bank Rt will cut various retail interestrates by 0.25-1%. OTP Bank Rt has also declined its retail interest rate by 0.5%. (Nv 14) M.K.

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Rába returns to profit Rába Rt, a Hungarian maker of axles, vehicle parts and military trucks, posted a profit last year after aloss in the previous two years as the company was helped by gains from currency contracts. Netincome was Ft 1.82 billion compared with a loss of Ft 7.52 billion forint a year earlier, Gy?r, Hungary -based Rába said. Sales climbed 27 percent to Ft 40.16 billion. Rába made currency-futures contractsfor dollar-denominated transactions after the forint's gains weighed on earnings by cutting the forintvalue of sales in the U.S. and Europe to buyers such as Deere and Co. and Caterpillar Inc.(Bloomberg; NG 7, MH 12)

HVB more than doubles on '04HVB Mortgage Bank Rt reported of a record high Ft 1.711 billion pre-tax profit in 2004, which is 2.5times higher than the previous year. Its after taxes profit jumped up to Ft 1,489 billion. (MH 12) E.C.

Malév EGM approves new chairman and CEO An EGM of state-owned Hungarian airline Malév Rt approved on Friday the appointment of Péter Honigto the post of chairman of the board and of János Gonci to the post of CEO on Friday. Honig, 53,comes from steel works Dunaferr Rt, where he worked as deputy-chairman and CEO. Gonci, 51,served on the board of airport operator Budapest Airport Rt. He also owns Fairplane, a company whichoperates six-seater aircraft, aerobatic aircraft and gliders. Former chairman-CEO László Sándor stepped down in January for personal reasons. (Econews; Sat MH 12)

Zalakerámia closes with a loss

Tile manufacturer Zalakerámia Rt closed the year with Ft 18 billion sales revenue and Ft 340 millionloss. The latter was the result of a daunting Ft 1.7 billion negative profit in Q4, due to amortization andone-off costs like those of downsizing and ownership change. Austrian strategic investor Lasselsberger bought out the Hungarian Foreign Trade Bank Rt (ÁÉB) in late September. (NG 8) P.P.

Fotex takes a 75% lossIn a business year marred by the closure of the Keravill and Fotexnet chains and several Azúr stores,Fotex Rt's consolidated sales revenue shrank by 75% in 2004 from the previous year's Ft 52 billion toFt 38 billion. The company posted a Ft 1.4 billion loss, which compares with Ft 1.5 billion profit lastyear. The only company within the group that produced good results was Keringatlan Kft, a real estatemanagement company, which saw 54% revenue growth and reaped a healthy profit. (NG 8) P.P.

IEB profit up 18%Publicly traded Inter-Európa Bank Rt posted Ft 2.1 billion consolidated after-tax profit in its preliminary2004 earnings report, up 18% yr/yr. The group's interest revenues rose from the previous year's Ft 14.2billion to Ft 18.6 billion. Consolidated net assets totaled Ft 206.4 billion at the end of the year, almostthe same as the bank's and 4.2% more than the 2003 figure. (NG 21) P.P.

Bank Gutmann establishes investment officeVienna-based Bank Gutmann AG will open an investment consulting office in Budapest soon, thecompany announced. The bank already serves many Hungarian clients and wants to become CentralEurope's leading private bank, chairman Rudolf Stahl said. Gutmann's clients can be privately-ownedHungarian firms or wealthy individuals, Stahl said. (BBJ 3) M.K.

FHB up 75%

FHB Rt consolidated after-tax profit reached Ft 7.044 billion in 2004, which is a 75% up on Ft 4.026billion in 2003. The bank's ownership structure changed significantly from 2003 to 2004 as the foreigninvestors' share had gone up to 33.1% from the earlier 12.3% while the local investors' ratio haddropped to 3.3% from the earlier 13.7%. FHB's 2003 equity was Ft 11.5 billion, which increased by61.1% to Ft 18.6 billion by 2004, and it increased its cost/income ratio from 51.7% to 35.7%, which isan internationally significant cost-efficiency increase. (MH 14) E.C.

Linamar profits up despite falling salesLinamar Hungary Rt, a maker of vehicle parts and farm machinery, reported declining sales in 2004,but profits rose from Ft 297.67 million to Ft 541.49 million because of exchange rate gains. Operatingprofit fell from Ft 860.8 million to Ft 251.78 million, according to the company's unconsolidated reportpublished Friday. Sales fell slightly from Ft 20.88 billion to Ft 20.71 billion, mainly because of a drop in

domestic sales from Ft 5.3 billion to Ft 2.87 billion. (Econews)

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Economics

GKI projects slowing investment growthEconomic research company GKI forecasts GDP growth of 4% in 2004, according to its latest monthlyreport. The forecast is unchanged from the previous report. Investment growth will slow from 10% in2004 to 8% this year, in spite of big EU-funded infrastructure projects, according to GKI. These projectswill boost growth in the building sector, which GKI expects to grow 8% in 2005, a percentage pointmore than in 2004. But the sector will also be hurt as the number of new homes falls from last year'srecord level, perhaps to below 35,500, the number of new homes built in 2003. (Econews; NG 3)

Project subsidiesThe budget has secured Ft 27 billion for this year and next year to carry out the preparations necessaryfor projects starting in 2007, National Development Office (NFH) vice CEO Péter Heli announced. Theamount will suffice the preparation of 30 state and municipal mega-investments, which will enable theseprojects to later apply for EU subsidies. The first round of construction is yet to be decided. Thepreparation of the projects that were to use the EU structural fund's resources between 2004-2006 hasbeen successful. (NV 5) E.C.

ÁAK set to sell more highway stickersState Motorway Management (ÁAK) Rt aims to sell more highway stickers this year, despite the factthat prices have gone up. ÁAK sold 8,6 million stickers thus turning over Ft 19 billion, this year they areplanning on selling 9 million tickets and expecting Ft 26 billion in revenues. (NV 5) E.C.

Politics

Hungarians stand divided over WWII battleWhile anti-Fascist veterans and Defense Ministry officials gathered near the Buda Castle to remember Hungarian volunteers who lost their lives in fighting the last remaining Nazi troops nested in the BudaCastle sixty years ago, an outlaw neo-Nazi group drew a crowd of a thousand to Budapest's Heroes'Square for its celebrating a breakout attempt of the embattled Hitlerites. (MTI; Sat MH 3,)

Domestic

Eastern Euro Catholic leaders in BpCatholic church leaders from nine Central and Eastern European countries have started a meeting inBudapest on Saturday discussing their views on the position of Christianity in Europe. Hungarian

bishop András Veres noted that on the eastern part of the continent formerly persecuted churches hadnow to create those contacts with the state that had been established many decades ago in free,democratic countries in Western Europe. (MTI)15 February 2005 Business

MKB posts after-tax profit of Ft 14.791 blnHungarian Foreign Trade Bank (MKB) Rt had unconsolidated after-tax profit of Ft 14.791 billion in 2004,up 13.6% from a year before, MKB announced yesterday. Net income rose 41.5% to Ft 13.312 billion.MKB made provisions of Ft 1.479 billion in 2004, as against Ft 1.302 billion in 2003. Unconsolidated netincome was Ft 13.312 billion, up from Ft 9.411 billion a year before. In 2003 MKB paid dividend of atotal Ft 2.304 billion, but its 2004 flash report shows no dividend fund. MKB had total assets of Ft 1,458billion at the end of 2004, up 27.7% from a year before. (Econews; NG 6)

Pannonplast Q4 loss narrowsPlastics maker Pannonplast Rt said its fourth-quarter loss narrowed as the company’s newmanagement struggles to turn around the company. The loss was Ft 820 million compared with a lossof Ft 1.17 billion in Q4 of 2003, the company said in a statement posted on the Budapest StockExchange’s Web site. Sales fell 14% to Ft 6.46 billion. Pannonplast had its third annual loss last year,as faltering economic growth in Western Europe reduced demand for products such as television sets,computer monitors and printer casings. The company has been selling units, real estate assets andequipment to stem losses and pay off debt. (Bloomberg; MH 12)

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Erste Bank profit after Postabank Erste Bank Hungary Rt had consolidated pre-tax profit of Ft 6.193 billion in 2004, according toHungarian Accounting Standards, 3.3 times its profit in 2003. Erste Bank had total assets of Ft1,114.479 billion at the end of 2004, up from Ft 508.5 billion a year before. The strong showing was theresult of a quick merger between Erste Bank Hungary Rt and Postabank Rt, which Erste’s parentbought at the end of 2003. (Econews; NG 6, Nb 15)

Raiffeisen posts profit of Ft 11.247 blnRaiffeisen Bank Rt had consolidated after-tax profit of Ft 11.247 billion in 2004, up 10% from a year before, the bank announced yesterday. Raiffeisen will not pay a dividend on 2004’s profit. Last year Raiffeisen paid a Ft 3.669 billion dividend on 2003’s profit. Raiffeisen had total assets of Ft 1,083 billionat the end of 2004, up 29.6% from a year before. Loans to clients rose 26.3% to Ft 811.656 billion in2004. Clients’ deposits rose 35.5% to Ft 740.041 billion by the end of 2004. (Econews; NG 6)

CIB Bank consolidated profit up 80%CIB Bank Rt had after-tax profit of Ft 17.19 billion (Ft 70.3 mln) in 2004, up 80% from a year earlier,according to the bank’s consolidated unaudited annual report, published yesterday. After deductinggeneral provisions and a Ft 2.5 billion dividend fund - equivalent to the dividend paid out on 2003’sprofit - CIB Bank had retained earnings of Ft 13.28 billion, up 121%. Total consolidated assets were Ft1,195.33 billion at the end of last year, up 13% from the end of 2003. CIB Bank’s client assets totaled Ft964.52 billion at the end of 2004, up 16%. The bank’s liabilities to clients rose 7% to Ft 582.05 billion.CIB had consolidated net interest revenue of Ft 50.65 billion in 2004, up 34% from a year before.(Econews; NG 6)

Budapest Bank offers consolidated loanBudapest Bank Rt (BB) is launching a new type of personal loan scheme allowing clients to lumptogether their various existing short-term debt liabilities to repay them in one, while having up to 20years to pay back the loan. Under the facility, a type of second mortgage, debtors are required to put upproperty as collateral. Interest on foreign exchange loans with a term of 20 years is 5.24%-14.19%,while on forint loans it is 12.74%-22.64%. (MH 12, Nv 5) S.F.

AÉB posts after-tax profit of Ft 17.426 blnGeneral Banking and Trust (AÉB) Rt had consolidated after-tax profit of Ft 17.426 billion in 2004, up Ft

4.5 billion from a year before, the bank announced yesterday. AÉB had unconsolidated after-tax profitof Ft 16.696 billion, up Ft 4 billion from 2003. AÉB had unconsolidated total assets of Ft 244.571 billion,down from Ft 274.232 billion at the end of 2003. Consolidated total assets dropped from Ft 278.220billion to Ft 245.268 billion by the end of 2004, because of the weaker U.S. dollar. (Econews; NG 6)

OTP planning Ft 146/share dividend OTP Bank Rt is planning to pay a Ft 146/share dividend, chairman-CEO Sándor Csányi told the pressin Budapest yesterday. The dividend must still be approved by shareholders and could changedepending on the bank’s stock of treasury shares, Mr Csányi added. Last year OTP Bank’s real returnon equity rose 450 basis points to 30.4%, while the bank’s return on assets rose 62bp to 3.28%, Mr Csanyi said. He added the bank’s total assets of Ft 4,200 billion were a good indication of the weight of the bank in Hungary’s economy. (Econews; NG 6, 14)

Arago posts losses of Ft 3.24 bln Arago Rt, a holding company owned by Hungarian investors, had consolidated after-tax losses of Ft3.24 billion in 2004, as against after-tax profit of Ft 51 million in 2003. Arago had consolidated net salesof Ft 44.07 billion, up 11.6% from a year before. Domestic sales rose 25.2% to Ft 31.61 billion, whileexports dropped 12.5% to Ft 12.46 billion. Arago subsidiaries salami maker Pick Szeged Rt, hotel chainHunguest Hotels Rt and holding company Forrás Rt were included in the consolidation, but alsoprepared consolidated reports themselves. (Econews; MH 12)

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Brau Union reports after-tax profit of Ft 909.2 millionBrau Union Hungária Brewery Rt reported after-tax profit of Ft 909.2 million in 2004, down from Ft2.694billion in 2003. Rising material costs and payroll costs accounted for the decrease. Brau Unionhad net sales of Ft 39.229 billion, up 15.4% from a year before. In spite of an 8.6% volume decrease insales of locally-brewed beer, Brau Union’s sales rose 7.8% to 15.3m liters. Its market share rose from24.8% to 27.1%. Still, a 30% rise in material costs and a 21% rise in payroll costs reduced operatingprofit by two-thirds. Brau Union’s operating profit was Ft 1.04 billion in 2004, compared to Ft 3.2 billiona year earlier. (Econews; MH 12)

Danubius Hotels profits rise to Ft 1.37 billionDanubius Hotels Rt’s after-tax profit rose 211.3% last year to Ft 1.37 billion in 2004, according to itsconsolidated annual report, prepared using IFRS and published yesterday. The big increase in profitwas the result of changes in Danubius’s consolidation. Sales revenue rose 5.6% in 2004 to Ft 38.84billion. Danubius had pre-tax profit of Ft 5.32 billion, down 9.5%. In Q4 alone, Danubius hadconsolidated pre-tax losses of Ft 1.1 billion, Econews calculated based on the company’s preliminarynine-month figures. Danubius said that fourth-quarter sales growth slowed to 2% yr/yr, while operatingexpenses rose at a rate of 11.7%. Before taxes and excluding dividends paid to minority shareholders,Danubius had profit of Ft 1.54 billion in 2004 as against losses of Ft 126 million in 2003. (Econews; MH12, NG 14)

Agrimill-Agrimpex posts losses

Agrimill-Agrimpex Rt, an agribusiness listed in the Budapest Stock Exchange’s ’B’ category, posted netlosses of Ft 156.4 million in 2004, down from net profit of Ft 309.8 million in 2003. After the companystopped milling and mixing feed - two of its core activities - revenue fell faster than costs, resulting inoperating losses, according to Agrimill-Agrimpex’s unconsolidated annual report published yesterday.Net sales revenue fell 43% to Ft 3.9 billion in 2004. Cost of sales fell just 35%, resulting in an operatingloss of Ft 324 million. In 2003 the company had an operating profit of Ft 176 million. (Econews)

econet.hu posts after-tax profit of Ft 26.43 mlnIT company econet.hu Rt had consolidated after-tax profit of Ft 26.43 million in 2004, according toIFRS, up 154% from a year before, econet.hu announced yesterday. The current report is econet.hu’sfirst consolidated report, but the profits of the econet.hu’s subsidiaries were entered into net assets.Econet.hu became profitable at operating level for the first time in years in 2004, reporting operating

profit of Ft 47.56 million, compared to operating losses of Ft 33.37 million in 2003. In addition tointernet-related services, econet.hu started selling software solutions and consulting services.(Econews; MH 16)

Graphisoft secures Euro 5.1 mln profit Graphisoft R+D Software Development Rt has guarded itself from dwindling profits due to theweakening of the dollar -futures have partly compensated for the setback bringing revenues frominterest of Euro 1.6 million. Last year, Graphisoft nearly doubled its after taxes profit, reaching Euro 5.1million, as opposed to Euro 2.6 million in 2003. Chief executives do not expect profit to double again in2005, but the management is optimistic. (NG 14) E.C.

Domus reports profit of Ft 9 mln in 2004Furniture company Domus Rt, a subsidiary of retail giant Fotex Rt, had consolidated after-tax profit of Ft 9.06 million in 2004, down from Ft 116.6 million a year before. Domus blamed the decline on fallingsales. Domus had consolidated sales of Ft 7.16 billion, down 9% from 2003. In Q4 sales fell 20%compared to Q4 2003. Operating losses totaled Ft 28.2 million in 2004, as against operating profit of Ft91.5 million in 2003. Domus had net financial profit of Ft 48.6 million in 2004, up from Ft 34.2 million in2003, because of increased interest revenue and an attractive exchange rate for its import activities.Domus had consolidated pre-tax profit of Ft 17.7 million, down from Ft 122.6 million in 2003. Domushad net assets of Ft 3.35 billion at the end of 2004, including registered capital of Ft 1.63 billion.(Econews)

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Globus posts losses of Ft 817 mln last year Globus Canning Rt had net losses of Ft 817m (Euro 3.34m) in 2004, according to its consolidatedannual report, published yesterday. All of the losses were accumulated in Q4 (Globus reported nine-month profit of Ft 250 million) and the management is uncertain of their cause, although the glitches ina new IT accounting system could be the reason, the report notes. Globus will hold a press conferenceat a later time to announce the reason for the fall in profit. Globus ended 2003 with net profit of Ft 1.72billion. The annual loss originated with Globus’s Hungarian companies, because its Polish subsidiaryGlobus Polska posted annual net profit of Ft 145 million on sales of Ft 5 billion. (Econews; MH 12, NG

13)Savings coops report after-tax profit of Ft 8.9 blnHungary’s Association of Savings Cooperatives (OTSz), which comprises 156 savings cooperatives,reported after-tax profit of Ft 8.9 billion in 2004, according to preliminary figures, up 22.6% from a year before. Pre-tax profit rose 20.4% to Ft 10.6 billion. OTSz had interest revenue of Ft 48.2 billion in 2004,up 9.2% from 2003. General management costs rose 13.6% to Ft 43.4 billion in 2004, increasing lessthan in 2003, but rising faster than interest revenue. (Econews; NG 6)

Gardenia posts 2004 profit because of falling costsGardenia Lace Curtains Manufacturer Rt had consolidated after-tax profit of Ft 19 million in 2004,according to Hungarian Accounting Standards, up from losses of Ft 117 million in 2003. Gardenia hadconsolidated operating profit of Ft 33 million, up from operating losses of Ft 6 million in 2003. Net salesdropped 8.8% to Ft 2.33 billion. Gardenia turned a profit in spite of the drop in sales, because of a dropin costs, as well as financial losses of Ft 17 million, a substantial improvement from financial losses of Ft 116 million in 2003. (Econews)

Airlines to pay damages for delaysFrom Thursday, Euro 250-600 damages will have to be paid to passangers who do not reach their destinations in time and/or on the flight they have their reservation for. Airlines will also have toreimburse the ticket and get the passanger home free. Ferihegy-based airlines belong to the middlerange in Europe as far as punctuality is concerned. According to the Association of European Airlines(AEA) statistics last year 83% of 45,000 Malév Rt’s flights started as scheduled. Some 78% of SkyEurope Kft’s 3800 flights starting from Ferihegy took off on time, says György Boros, the leader of the Hungarian office, and it had only three or four delays of over 5 hours. He added that the company

had always done its best to take care of its pasengers, even before the new regulation. (Nb 1, 16) K.H.Motorway co angles for Ft 125 bln loanThe National Motorway Rt (NA) is due to take out a Ft 125 billion loan to bankroll the first round of thegovernment’s upcoming PPP motorway construction program, the Economy and Transport Ministrysaid yesterday. The loan is pending a legislative amendment by parliament seeking to raise this year’sbudget on motorway construction by another Ft 100 billion to Ft 225 billion, the Ministry added. The Ft125 billion extra will be used to finance currently running construction projects. (Nv 5) S.F.

Economics

Inflation 4.47% in JanConsumer prices have gone up by 4.47% yr/yr in January, according to a Napi Gazdaság preliminary

report. For 2005, experts estimate a 4.12% for the whole year. Analysts argue that since the effects of the tax law changes last year will last no longer than 3-4 months, this year’s lowest inflation rate isexpected to be in May or June. Food prices may continue to enhance disinflation, since cheap importproducts create enormous competition on the food market. Then in H2 analysts expect a slight increasein inflation again. (NG 3) E.C.

Politics

PM’s speech full of promiseThe government wants to improve Hungary’s position of competitiveness by 10 places by 2013, saidFerenc Gyurcsány in his speech in the Parliament yesterday. He emphasized that special attentionshould be drawn to IT and communications, biotechnology and the health industry, business servicesand logistic centers, vehicle industries, tourism, environmental industries and the entertainment sector.

Amongst long-term plans the PM mentioned starting the construction of metro 5, and that the railway journey between Budapest and Pécs be reduced to 1.5 hours ‘by the end of the next decade’. (NG 3)E.C.

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Cultural Minister takes oathNew Cultural Heritage Minister András Bozóki took oath yesterday on the opening day of theParliament’s spring session period. He replaces István Hiller, who has become president of theHungarian Socialist Party (MSzP). (Nb 6) K.H.

Fidesz proposes tax cutsMain opposition party Fidesz said it will put forward its own tax cut plans in Parliament tomorrowfocusing on eight areas aimed at easing the tax burden of businesses. The motion will, among other things, propose to cut the social contribution rate for employers from 29% to 24%, halve the 16% local

business tax for companies with revenues less than Ft 100 million a year, while local business taxwould also be entirely tax-deductible in future. Fidesz said it will also move to cut administration fees onstarting up a new business by as much as 60%, make the simplified business tax ’eva’ more widelyaccessible, and increase the revenue ceiling eligibility to Ft 50 million from the current Ft 25 million.(MH 3) S.F.

Domestic

Minardi-Baumgartner talks stopFormula 1 pilot Zsolt Baumgartner will not participate in the racecar competition this year. Negotiationswith Minardi have stopped, furthermore, it is not yet decided whether Minardi itself will be able toparticipate in the first three rounds of the world championship. Minardi’s racecar from last year nolonger complies with the new safety regulations, so their participation depends on the fellow teams’

approval. Eight teams have approved it already, yet they are still waiting for Ferrari to give them agreen light. According to Baumgartner, these were the reasons negotiations with Minardi had to stop.(MH 22) E.C.

Farmers demonstrate on Thursday The Alliance of Hungarian Pig Breeders (MSSz) and the Alliance of Hungarian Farmer Circles andFarmer Cooperatives have organized an agricultural demonstration for Thursday in Kossuth tér, withthe aim of getting the government to pay off the backlog in subsidies, speeding up corn intervention,taking market protection measures and establishing a new forum for reconciliation of interests. (Nb 16)K.H.16 February 2005 Business

CIB Credit reports net profit of Ft 2 blnCIB Credit Rt, CIB Bank Rt’s car and asset leasing company, had net profit of over Ft 2 billion in 2004and total assets of Ft 159.07 billion, CIB Bank reported yesterday. CIB Credit will pay a Ft 1.96 billiondividend to CIB Leasing Rt and a Ft 40 million dividend to CIB Real Estate Leasing Rt. (Econews)

Phylaxia-Pharma had losses of Ft 29 mlnPhylaxia-Pharma Rt, a maker and distributor of veterinary products, reported losses of Ft 29 million in2004 in its unaudited consolidated report. Revenue fell 15% to Ft 783 million. The company could nolonger sell one of its drug premixes after May 1 2004 because the premix is banned in the EU.Domestic sales fell 13% to Ft 756 million, exports decreased 51% to Ft 27 million. (Econews)

Eco-friendly batteries from Jász-Plasztik

Car battery maker Jász-Plasztik Kft (JP) is poised to spend Ft 700 million in a technological investmentto produce a new suite of eco-friendly batteries that contain less lead and plastic, CEO Lajos Kaszasaid. The upgrade is also expected to boost productivity and increase manufacturing capacity by asmuch as 30%. Jász-Plasztik, which won Ft 100 million in state backing for the project, hopes to get thenew production line up and running by early summer. The company is also planning to set up a batteryrecycling plant for Ft 1.5 billion-Ft 2 billion in the near future. Jász-Plasztik registered only a minimalprofit margin last year on revenues of Ft 113 million. (Vg 1, Tue) S.F.

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MOL fined $46 mln on fuel pricing MOL Rt was fined koruna 1.35 billion ($46 million) by the Slovak government for its fuel-pricing policy.MOL, which operates in Slovakia through its Slovnaft AS unit, has 30 days to appeal the fine and maybe charged more based on another review, said Peter Papanek, a spokesman at Slovakia’s FinanceMinistry yesterday. The Slovak government says MOL charged more for fuel than its costs warranted.Slovakia’s government probably is cracking down on MOL as an easy target for extra revenue,investors said. ‘This is totally unreal and a bit political,’ said István Horváth of KBC Bancassurance.‘This shouldn’t be happening in an EU country.’ (Bloomberg; MH 3, NG 11, Nb 15)

Skoglund posts losses of Ft 50.3 mlnSkoglund Holding Rt, a haulage company which is changing into a real estate investor, had losses of Ft 50.3 million in 2004. The company had no revenue in 2004, but reported financial losses of Ft 10.5million, mainly the result of interest payments on loans taken out to make investments. Skoglundreported depreciation of Ft 32.8 million. In 2003 Skoglund also had no revenue. It reported financialprofit of Ft 20.8 million and depreciation of Ft 5.2 million. Skoglund had net assets of Ft 538 million atthe end of 2004, including registered capital of Ft 540.1 million. (Econews; NG 12)

Humet posts losses of Ft 139.4 mlnDietary supplement maker Humet Rt had losses of Ft 139.4 million in 2004. Humet, currently under liquidation, will hold negotiations with its creditors on March 14. The company has until April 6 to payback its debt - much of it back taxes - under a court order. In 2003, Humet had losses of Ft 115.6million. The company has been unprofitable for four years in a row, racking up accumulated losses of Ft1.458 billion. At the end of 2004 Humet had short-term liabilities of Ft 572.4 million and long-termliabilities of Ft 43.9 million. Humet had net assets of 175.5 million at the end of 2004. (Econews; NG 11,12)

FHB expects Ft 11 billion profit in Q1Land Credit and Mortgage Bank Rt (FHB) may produce a 22% rise in pre-tax income this year, a Ft 11billion up from last year’s 8.6 billion. However, the target figures fall short of the 2004 expansion. Thebank is in a slow-down phase, which it had already indicated in the middle-term strategy, said CEODániel Gyuris at a press conference yesterday. Dividends are not decided on yet but if calulated at lastyear’s rate they could be Ft 200, twice as much as in 2004. FHB expects the partner banks to ‘deliver’fewer loans, relying mainly on the activities of consortium partners and credit agents to improve

performance. (NG 11, 12) K.H.PSzÁF starts registry for ins. brokersMore than 11,000 names have been entered into a new registry of independent insurance brokerscreated by financial market regulatory authority PSzÁF. Brokers have until March 15 to register, under a law passed last year. József Banyár, the PSzÁF official in charge of the registration, said he expectsthe registry to contain about 20,000 names by the deadline. The registry is required by EU law. PSzÁFwill maintain the registry, but independent brokers and the companies that pay their commissions willprovide the information. (Econews)

Copying fee angers printer importersFrom Jan 1 of this year, importers of printers are also obliged to pay a reprography fee, according tothe copyright law and related government decrees. Companies that produce or import photocopiers andprinters or operate them for a fee must pay according to the capacity of their machines. For the sale of a printer the fee may be up to Ft 15,000, while for operating it may be between Ft 3,200 and Ft 7,800annually for a Budapest printing salon. For shops outside Budapest, the fees are lower. Importers of printers and photocopiers are considering legal action against the decree, CEO of Canon Hungary RtLászló Moravcsik said. (NG 10) G.R.

GVOP subsidies total Ft 45.5 bln Altogether 16 subsidies for the Economic Competitiveness Operational Program (GVOP) were offeredyesterday. A sum of Ft 45.5 billion will be spent within this program in 2005, Economy and TransportMinister János Kóka said. Companies may start submitting their application from March 1. The budgetof the program between 2004 and 2006 takes Ft 154 billion. With the help of last year’s grants about15,000 new workplaces will be created. Most of last year’s subsidies, Ft 28.7 billion were spent on 609

R and D projects. In total 9134 applications arrived in 2004, 4778 of them were given support. (Nv 5,MH 13) G.R.

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Le Belier to cut costsFrench-owned mould casting company Le Belier Rt will cut its operating costs through buying energyon the free market from this year, while it will also step up its sales campaign in order to cushion thenegative effects of an adverse market environment, deputy CEO András Dekovics said. The company,which took over the state-owned aluminum foundry of Ajka in western Hungary in 1994, has beenseverely hit by depressed automotive prices, the strong forint as well as high energy and labor costs,and must work hard to meet this year’s revenue target of Ft 28 billion, Dekovics added. (Vg 12, Tue)S.F.

Matáv publishes fresh ownership structureDeutsche Telekom (DT) continues to hold 59.21% of the shares of Hungarian telecom Matáv Rtthrough MagyarCom Holding GmbH, Matáv’s announcement yesterday of its ownership structure as of February 11 shows. DT’s ownership stake gave it a 59.49% of the votes. Matáv held 0.47% of theshares as treasury stock on February 11. Including the DT stake, foreign institutions held a combined87.83% of the shares and 88.24% of the votes. A mere 2,001 of the more than 1 million Matáv shareswere registered as the holding of Hungarian private individuals. (Econews)

Hyundai Motor aims for 10,000 cars in 2007 Hyundai Motor Hungary Kft is able to spend its profit on market expansion, after a decision by parentcompany Hyundai Motor Company, which sold 2.1 million cars last year, aims for sales of 2.4 millionthis year, and hopes to be one of the top 5 car manufacturers in 2006. The Hungarian subsidiary is

expected to show a similar pace of growth, with target figures of 4,000 new Hyundai for this year, 7,000for 2006, and 10,000 for 2007, said sales management spokeswoman Judit Dormán at a pressconference yesterday. (NG 4) K.H.

Tranzit rents space in CorvinThe recently abandoned Corvin department store in downtown Budapest has got its first new tenant,Tranzit Outlet, a clothing retailer owned by Imperial Kft, which has signed a deal to open shops on twofloors early next month. Corvin was put up for sale several years ago by its owner, Skála FashionHouse Rt, who officially moved out of the building on Monday. The ailing Hungarian retail chain is alsoselling its department stores outside Budapest, which will reportedly be taken over by a group of Chinese investors. (Vg 1, Tue) S.F.

Levi’s embarking on aggressive expansion

According to Napi Gazdaság information Levi Strauss and Co. intends to accelerate its expansion onHungarian clothes market. Levi Strauss Magyarország Kft is looking for franchise partners having atleast 50-80 sqm retail space to establish new Levi’s Stores and plans to cover the most frequentedplaces in county centers, including Budapest. They will also widen the range of product lines. As a firststep they wish to double the present network of 7 members said László Kodaj, CEO of the Hungarianenterprise. He added that Levi’s endeavors to fill the gap caused by Skála Fashion House Rt storechain leaving the clothes market. (NG 5) K.H.

NTK predicts Ft 4.5 bln revenueNational Textbook Publisher (NTK) Rt expects to close last year with revenue of Ft 4.5 billion and aprofit of several hundred million forints. Chairman Tamás Doffek trusts in increasing the profit this year,he said at a press conference yesterday. They have a 30% share in the textbook market, which

produces a total of Ft 15 billion turnover a year. The company sells 6-7 million books a year. Yesterdaythe company’s privatization was completed: Láng Holding Rt acquired a 70% minus 1 stake. The newCEO is István Jókai, who said the publisher will continue to select its suppliers through competition.(NG 4) K.H.

Economics

FinMin raises Q1 fiscal deficit forecast by Ft 45.9 blnThe Finance Ministry expects a Ft 415.8 billion fiscal deficit in Q1 2005, according to its latest forecastpublished yesterday. The projection is Ft 45.9 billion more than the Ministry’s last forecast from a monthago. According to figures published on the ministry’s website, the Jan-Mar projection for the socialinsurance funds deficit is Ft 134.7 billion, Ft 82.1 billion higher than last month’s forecast. The Jan-Febdeficit projection leaves room for a deficit of just Ft 46.2 billion deficit in March. (Econews; Nv 5, MH 11,

Nb 15)

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December industrial output down 1.4% yr/yr Hungary’s industrial output fell 1.4% yr/yr in volume terms in December according to working-day-adjusted figures, and was down 3.9% from November according to seasonally- and working-dayadjusted figures, the Central Statistics Office (KSH) announced yesterday. Unadjusted industrial outputrose 3.5% yr/yr in December. Industrial output rose 8.3% in 2004, after a 6.4% increase in 2003. Outputof Hungary’s manufacturing industries rose 9.4% in 2004. The headline figure was held back by a 3.5%fall in food industry output, because of the abolition of customs duties and import subsidies followingHungary’s EU accession. (Econews; NG 3)

EU urges Hungary to cut deficit further The European Commission urged Hungary to make deeper cuts in spending, saying the governmentrisks missing a self-imposed deadline of 2008 for getting the budget deficit in line with rules for adoptingthe euro. Hungary is aiming to cut the deficit from about 5.3% of GDP last year to the euro’s limit of 3%by 2008, with the goal of switching to the European currency two years later. Hungary’s plans to cutsales taxes are not balanced out by spending cuts, and the government’s deficit-reduction strategymight be undone by economic growth that lags behind expectations, the commission said in a reportcard to be published today. (Bloomberg; Nv 5)

Chamber of Commerce Head calls for real tax cutsLászló Parragh, who heads the Hungarian Chamber of Commerce and Industry (MKIK), told Hungary’sPresident yesterday that real tax cuts have to be made if Hungary is to remain competitive. Mr Parragh

was presenting President Ferenc Mádl with MKIK’s annual assessment of Hungary’s economy.Businesses paid Ft 100 billion more in taxes in 2004, and they will pay an additional Ft 35 billion-Ft 45billion this year, according to Mr Parragh. Mr Parragh called for a long-term economic policy for Hungary, one which would be independent of the changes of government. (Econews; NG 1, 3)

Budapest council budget proposal This year Budapest will have some Ft 399 billion at its disposal, 44% of which will go toward investmentand upgrade, according to the municipality’s budget proposal tabled on Monday. The municipality isdue take out a Ft 25 billion EIB loan this year for various projects and plans to raise another Ft 20 billionthrough bank loans or, alternatively, a bond issue. In 2005, altogether Ft 219 billion will be spent onoperation and Ft 8.2 billion on repaying debts. (Vg 1, Tue) S.F.

BUX and earnings rose in tandem last year

The combined net profit of Hungarian companies listed on the Budapest Stock Exchange rose by astaggering 52.5% to Ft 474 billion last year, but a closer reading of the figures show that 90% of theincrease came from the market’s two powerhouses, retail bank OTP Bank Rt and fuels group MOL Rt,the business daily Napi Gazdaság said yesterday. The 52.5% increase in profits posted by 44companies over the past few days was roughly in line with the 57% gain of the market’s headline BUXindex last year and came after a 19% rise in the bottom line of companies in 2003. Stripping out OTPand MOL, the remaining 42 companies only boosted their combined earnings from Ft 127 billion to Ft139 billion. This gives a rate of 9.4%, lower than the average interest rate. (Econews)

Politics

Committees give green light to bill on informersThe three parliamentary committees discussing a bill on exposing communist era secret service

informers yesterday found the draft legislation suitable for discussion at a plenary session. Thegoverning Socialists’ related proposal for amending the constitution, however, was rejected by thenational security committee. National security committee member Ervin Demeter (Fidesz) criticized theSocialist proposal, saying that publishing the data of those who had been on the staff of secret securityservices before 1990 and still work for them ‘would practically prevent the further operation of theseservices’. (MTI)

Domestic

Holocaust film attracts record number to cinemasHungarian cinema-goers went in record numbers over the weekend to see Lajos Koltai’s film Fateless,an adaption of the autobiographical novel about a Jewish boy’s experiences of the Holocaust that wonImre Kertész the Nobel prize for literature. Previously no Hungarian film had raised such interest with64,300 viewers flocking to theatres around the country from Thursday to Sunday evening, saidyesterday’s daily Népszabadság. Audiences for Fateless even outstripped those for the highest-grossing foreign film, Ocean’s Twelve, which attracted 28,000 viewers over the same period. (MTI)

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EduMin starts scholarships for teensThe Education Ministry is to start four new scholarship programs from September. They will help about20,000 students between the age of 12 and 18 with their studies, and around 4,000 teachers wouldalso get grants. The programs will cost roughly Ft 1 billion this year and Ft 2.2 billion in 2006, Minister Bálint Magyar said. This means that a student would get Ft 10,000 - Ft 12,000 monthly on average. Themeans of disbursing the subsidies has not yet been specified. (MH 7) G.R.

Radio protest removes offensive computer game An anti-Roma computer game was removed from an Internet home page recently. In the game ‘Oláh

Action’, players were set the task of ‘cleansing’ the counties of Hungary of Roma using firearms. Thegame was found by associates of Radio C and after their protest the home page was deleted by theservice provider. The company offers free storage space for about 50,000 users, and is not able tocheck the contents of all the homepages, owner of the company Gábor Dobay said. Illegal content isremoved as soon as it is found or reported, as in the present case, he said. (Nv 4) G.R.17 February 2005

Real wages down 1% in 2004Real wages fell 1.0% in 2004 compared to the previous year, the Central Statistics Office (KSH) saidyesterday. The drop is partly the result of a government decision last year to pay public sector workerstheir annual bonus in January, instead of December. In January-November, real wages fell 0.5% yr/yr.In November alone real wages fell 0.9%. Net wages rose 5.7% to an average Ft 93,783 a month last

year. During the same period, consumer prices rose 6.8%. Gross monthly wages increased 6.1% to Ft145,675 last year. In December alone, real wages fell 7.5% yr/yr and net wages fell 2.4% yr/yr.(Econews; NG 1,3 Nv 3, MH 12, Nb 15)

Rába secures Ft 10 bln military tender Following its successful participation in a public procurement tender in 2003, Rába Rt secured asecond order for military vehicles from the Defense Ministry, worth nearly Ft 10 billion altogether. In linewith a recently added clause to the 15-year framework agreement signed in 2003, Rába Vehicles Kftwill continue manufacturing military vehicles for the Armed Forces, which is already using the vehiclessupplied by the company in 2004. In addition to a Ft 1.2 billion order placed by the ministry last year,Rába has agreed to supply vehicles worth Ft 4.8 billion both this year and in 2006. (BBJ Website) Ng11

BUX Has Biggest Gain in 9 MonthsThe BUX Index climbed by the most in nine months, underpinning gains by Central European stocks.OTP Bank Rt, Hungary's largest lender, paced the advance after Morgan Stanley boosted its estimatefor the share price, citing profit growth at the company. The BUX climbed 3.1 % to 17,360.37, thebiggest increase among the 61 benchmarks tracked by Bloomberg worldwide. The measure rose 3.6 %on May 18. ‘Central European companies have started to report and what we're seeing, especially inHungary, is very good results,’ said Alexandra Richter, who manages the equivalent of USD 649 millionfor Allianz Dresdner Global Investors in Frankfurt. (Bloomberg; NG 11)

MOL to pay bigger dividend this year

Hungarian oil and gas company MOL will pay a bigger dividend this year than last year, according to the

company's CEO, Zsolt Hernádi. Hernádi said in yesterday's issue of business daily Világgazdaság that MOL willadopt a new dividend policy starting this year, which will result in a higher dividend payment on 2004's profit thanthe Ft 55 per share paid in previous years. Hernádi would not offer any further details about how MOL willformulate the dividend, but he said the company would not index the dividend to a performance indicator, becausethis would limit its options. MOL posted net profits of Ft 208.6 billion in 2004. (Econews; Wed Vg 18)

Sláger Radio ad revenue grows 42%The advertising revenue of Sláger Radio grew by 42% last year compared to 2003 data, commercialdirector Ádám Földes announced. Sláger's ad revenue reached Ft 4.4 billion, up from the previous Ft3.1 billion, Földes said. Sláger, which is owned by American Emmis, could also increase the number of its listeners in the age group 18-49 and has become an equal rival to market leader Danubius Radio,Földes said. Sláger had 112 new ad clients in 2004, Földes said. (Wed. Vg 14) M.K.

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New Hyundai importing firm established Korean vehicle manufacturer Hyundai has established an importing firm in Hungary to promote its car sales, sales consultant Judit Dormán announced. Hyundai Motor Hungary Kft has 28 dealers inHungary, but the network will be extended to 40 dealers, out of these 6-8 in Budapest, Dormán said.Hyundai plans to sell 4,000 cars in Hungary this year and want to increase this by 6,000 cars until2007, Dormán said. Last year 2,151 Hyundai cars were sold in Hungary. (Wed. Vg 13) M.K.

FHB buys own stocksThe Land Credit and Mortgage Bank Rt (FHB) announced the purchase of 3,500 series ‘A’ treasuryshares at the Budapest Stock Exchange (BÉT) on Feb. 15 in order to carry out its employee stockoption plan and implement its business strategy. The bank picked the right time to buy, since the Ft13,039 average price at which the purchase was made was practically the lowest since the end of 2004. This was FHB's first acquisition of its own stocks. One of FHB's general meetings last year setthe overall limit for treasury shares at 10%, with no more than 7% of the ordinary series ‘A’ allowed tobe in the bank's ownership. (NG 11) P.P.

Széchenyi card set to offer new servicesKa-Vosz Rt, the coordinator of SME's Széchenyi Card program, will soon pick strategic partners amongthe throngs of companies hoping to get a boost from offering their products or services at a discount tothe 30,000 card holders, CEO László Krisán said. With plenty of candidates to choose from, theorganization will make sure to pick quality services that are vital to SME's, enabling them to purchasemobile phone subscriptions, cars or insurance at a discounted rate. Originally nothing more than asimplified and state-subsidized credit line launched in 2002 for SME's, the Széchenyi Card programattracts 1,500-2,000 new small businesses per month today, 85% of which are based in the provinces.The concept has become a success story and it is now listed by the EU among the best SME solutionsrecommended to its member countries. (NG 1) P.P.

Mol eyeing majority stake in INAHungarian gas and Oil Company MOL Rt aims to increase its stake in Croatian affiliate INA d.d. to50%, with USD 500 million to spend on the acquistion, wire agency Dow Jones reported citingManaging Director György Mosonyi. MOL acquired a 25% stake in INA for USD 505 million in 2002,and the company is expecting very little competition or none at all in further acquisitions, Mosonyicommented on the next stage of INA privatization, scheduled by the Croatian government to take place

in June. MOl's presence is likely to scare off the rest of potential investors, he added. The Hungarian oilcompany is planning further expansion in Central Europe and in the Balkans, where the economy, andconsequently fuel consumption, is growing faster than in the West. (BBJ Website) Ng 11

Pannon pre-tax profit of Ft 33.5 blnPannon GSM Rt, the second biggest wireless services company in Hungary in terms of subscriber numbers, had pre-tax profit of Ft 33.5 billion in 2004, up 18% from 2003, Pannon GSM CEO Gábor Kocsis said yesterday. The company had revenue of Ft 176.2billion last year, up 3%. Pannon GSM had2.96m subscribers at the end of 2004, 4% more than a year earlier. Norway's Telenor wholly ownsPannon GSM. (Econews; NG 5, Nv 5, MH 12)

Paks denies nuclear waste rumoursIstván Mittler, spokesman of the Paks nuclear power plant denied news that the plant does or plans totransfer and dispose nuclear waste in Russia. A Russian environmental protection association recentlyasked PM Ferenc Gyurcsány to annul the relevant agreement between the power plant and Russia.Mittler confirmed that there is no such agreement of the company and added that the facility disposednuclear waste recently, as usual, at a temporary site operated by non-profit organization Nuclear WasteManagement Kht. (Nv 5) R.G.

Duna TV set to nominate new president The board of the Hungária Television Public Foundation, the supervisory body of state-owned satellitechannel Duna TV will try to choose a presidential candidate for the channel today from 19 applicants.This is the fourth time the board has tried to nominate an applicant to the position since last March.Unnamed sources say that the four strong candidates are film director György Szomjas, CsabaBelénessy, current vice president of the channel, program director András Borsány Gyenes and Péter

Heltai, publisher of Magazine Médiamix. (NV 4) R.G.

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Vanreusel Snack to build in MórahalomBelgian-based Vanreusel Snack plans to build a meat processing plant in Mórahalom, south Hungary,mayor Zoltán Nógrádi said. The investment will cost Ft 1 billion and the factory may employ 200 peoplein three years, Nógrádi said. Vanreusel signed the agreement with the local council recently and willstart production in September in the industrial park of the town, Nógrádi said. The firm conducted talksin 22 towns and villages in Hungary before deciding for Mórahalom, Nógrádi said. (Nb 11) M.K.

MasterCard on the upThe number of MasterCard holders increased to 1.25 million last year, who concluded 24.6 million

transactions worth Ft 673 billion in 2004. This number counts for a 15% increase compared to 2003.The company will focus on developing its network of points of sale, as the numbers of such were up by6% in a year. (MH 12) R.G.

Hunguest reports lossesHunguest Hotels Rt fell nearly Ft 1 billion short of its Ft 12.5 billion revenue target last year in spite of the yr/yr increase in foreign visitors to Hungary, CEO István Hülvely said in a press conferenceyesterday. The disappointing result is partly due to the fact that Hungary's hotel supply, boosted byseveral major state-subsidized projects, grew at a faster rate than demand over the past few years,Hülvely said. He added that Hunguest Hotels did not benefited from the discount airline boom either, asmost of its facilities are located in the country rather than in Budapest. Hunguest Hotels is owned by Arago Rt, whose major investor is Tamás Leisztinger. (NG 4) P.P.

Economics

Tax office chief resignsThe president of the Hungarian tax office APEH György László Király resigned yesterday, the financeministry said. The finance minister accepted the resignation and nominated the chief of the SzabolcsCounty tax authority János Szikora to succeed him in the position. In a short statement, the financeministry said Finance Minister Tibor Draskovics agreed that the need for firmer tax controls thatadapted faster to the changing economic environment required new leadership at the tax authority. FMsecretary of state Tamás Katona said that he expects more efficient and result oriented leadership at APEH, while Király was a ‘scientist type’ leader, not a manager type one. (Econews; Nb 1, NG 1, Nv 5,MH 11)

Draskovics confident EU will approve policiesIn order to meet the self-imposed budget deficit target of 3% by 2008 and adopt the Euro in 2010according to schedule, the European Commission (EC) is recommending that Hungary should cut itsbudget deficit by a further 0.5 percentage points this year in addition to reducing the gap from 2004's4.5% to 3.8% as planned, wire agencies reported today. The reports followed Tuesday's news of ECrecommendations, which did not contain exact figures. Contrary to the press release on which thenewswire reports were based, the EC is not suggesting that Hungary should cut its budget gap by afurther 0.5 percentage points, Finance Minister Tibor Draskovics declared in a press conferenceyesterday, arguing that the cut mentioned in the news was meant as part of this year's reduction to3.8%. Draskovics is confident that March's Ecofin meeting will approve the measures Hungary is takingto stabilize public finances. (NG 1) P.P.

Leasing market growth almost halved

Hungary's leasing market expanded 10% in 2004, a little more than half as much as in 2003. Growthwas hampered by stagnating new car sales, which account for three-fourths of the value of all leases.Hungary's leasing companies were leasing assets worth Ft 1,070 billion at year's end, well under theindustry's Ft 1,200 billion target set at the start of the year, Pál Antáll, who heads the HungarianLeasing Association, said in yesterday's issue of business daily Világgazdaság. New car and sportsutility vehicle sales fell 0.2% last year, according to figures from the Association of Hungarian VehicleImporters (MGE). (Econews; Wed Vg 1)

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K and H SME confidence index downK and H Bank Rt's SME business confidence index fell 1.8 points to +0.2 in the fourth quarter of 2004.The index measures SMEs' outlook for the next twelve months on a scale of -100 to +100. SMEs wereincreasingly wary of rising payroll costs. The index shows that SMEs were non-committal about their expectations for the year, but the 1.8-point drop is a substantial one compared to the previous quarter.The negative expectations reflect SMEs' reaction to governmental measures, such as the withholdingof VAT refunds at the end of last year, a move that has immediate repercussions for micro businesseswith sales of less than Ft 50 million. (Econews; NG 4, Nv 5)

Farmers granted years graceMaking concessions to this year's difficult market situation due to the grain surplus, farmers have beengranted another year's grace period by the Ministry of Agriculture and Rural Development before theyhave to start repaying accession agricultural loans, minister Imre Németh announced after yesterday'sgovernment meeting. The modification does not mean that the maturity of the loans will be extended;on the contrary, the grace period will make the repayment term shorter. (NG 3) P.P.

PSzáF fines Groupama, MÁV InsuranceThe State Financial Institutions Supervision (PSzÁF) imposed a Ft 800 million fine on GroupamaInsurance Rt and MÁV General Insurance Association since neither of the two companies met their legal obligations to provide information to the Central Data Processing, Records and Election Bureau of the Interior Ministry. Moreover, Groupama failed to make certain cash payments in a timely manner.PSzÁF obliged Groupama to set up a system that is suitable for handling complaints, while the insurer of state railway company MÁV will have to create a system of up-to-date records. (BBJ Website)

Jan inflation rate may match Poland'sLondon emerging markets analysts have said Hungary's January 12-month inflation rate could be asurprise, following the bombshell announcement of Poland's 4.0% January inflation rate, down from4.6% in December. Hungary's January inflation figures will be published later today. Several of the nineemerging markets analysts polled by MTI's London correspondent said the sudden, unexpectedinflation slowdown could be a regional phenomenon, and Hungary's January inflation rate may be lower than forecast. The analysts' consensus was 4.43%. (Econews; MH 11)

Politics

Hungary, Russia sign agreementsPrime ministers Ferenc Gyurcsány of Hungary and Mikhail Fradkov of Russia signed an agreement oneconomic cooperation in Moscow yesterday, replacing a former accord containing trade policyelements deemed incompatible with Hungary's EU membership. The step has paved the way for reconvening the two countries' joint inter-governmental committee. Gyurcsány noted that Hungarianexports to Russia had doubled since 2002, referring to the remarkable performance of Hungary's drug-maker Gedeon Richter Rt, medical equipment manufacturer Medicor Rt and the Nagykanizsa CanningFactory on the Russian market. (MTI; Nv 1, Nb 3, MH 9)

People pessimistic According to a survey conducted during the first week of February by public opinion pollster Medián,people are less optimistic about the country and their future this month than they were in the beginning

of the year. The research shows that almost all politicians' popularity declined in the same period, twoexceptions are former PM and Fidesz leader Viktor Orbán and Fidesz parliamentary group leader János Áder. However, party preferences did not change much during the same period, the Mediánsurvey shows that major coalition member MSZP has a 40% support in February, while Fidesz holds52% among party faithful. (MH 1) R.G.

Domestic

64 priests- secret agents, historian says64 Catholic priests were secret agents working as informants before 1989, church historian Gábor Adriányi claims in the latest issue of magazine Vigília. Adriányi, who moved to Germany decades ago,believes about 2% of Hungarian priests were agents, but only 64 could be identified by both real nameand cover name. The majority of these priests have already died or are retired, however, one current

bishop is also on the list, Adriányi said. The government has no authority to make priests come out withtheir past, but the church should tell the truth about its agents, Adriányi said. (Nb 7) M.K.

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18 February 2005 Business

Bonds highest gain in world Hungarian bonds rose more than any other nation’s debt after a government report showed inflationlast month slowed to its lowest since May 2003, fueling speculation the central bank will cut interestrates. Consumer price gains fell to an annual 4.1 % rate in January from 5.5 % in the previous month,the Central Statistics Office in Budapest said yesterday. ‘The inflation data makes absolutely sure thatthe central bank will cut interest rates,’ said Krisztián Tóth, a bond trader at the Budapest unit of HVBGroup, Germany’s No. 2 bank. ‘The bond market has taken this news very positively and people arebuying.’ (Bloomberg; MH 1, Nv 6, NG 14, Nb 16)

OTP has been rallying for daysFollowing a bullish year OTP Bank Rt has become one of the 30 most valuable banks in Europe. Atyesterday’s closing quotation of Ft 6970 the bank’s 280 million stocks are worth Ft 1,952 billion. The6.5% stocks owned by the management are registered at a value one fifth of the bourse rate, so thebank has a ‘secret reserve’ which reached Ft 100 billion yesterday, almost 75% of last year’sperformance of Ft 140 billion. Analysts therefore recommend shares of OTP which have produced a160 % rise over the last 14 months. (NG 1;11;12) K.H.

Raiffeisen net profit of Ft 16 bln

Raiffeisen Bank Rt had unconsolidated after-tax profit of Ft 16.27 billion in 2004, according to IFRS,24% more than in 2003. The IFRS figure exceeds the bank’s HAS net profit figure by more than Ft 5billion. The bank’s biggest achievements last year were opening 25 new branches, bringing the total to72, along with boosting turnover and profitability, CEO Péter Felcsúti said yesterday. Raiffeisen Bank’sboard will propose payment of a dividend of more than 20% of the nominal value of both ordinary andpreference shares to an AGM on March 17. (Econews; NG 5, MH 13)

Viasat losses despite high revenuesHungary’s third largest commercial TV channel Viasat 3 had turnover of Ft 1.27 billion in 2004 a 42%increase on last year, according to the a report of Swedish owner MTG AB. Nonetheless it made Ft1.17 billion losses. The channel’s advertising revenues in Q1 may be some 50% higher than in thesame period of 2004, market analysts say. Meanwhile the National Radio and Television Board (ORTT)is making an inquiry as to whether Viasat 3 is broadcasting countrywide. The channel is registered as alocal television and therefore the stricter rules which govern national TV do not apply. (Wed Vg 11)G.R.

Brau profit down by 60%Beer brewery Brau Union Hungária Rt performance has slumped since the Heineken takeover. Lastyear its profit fell 60 %, which resulted in the Hungarian management resigning. According to thecompany’s preliminary report they had a Ft 39.2 billion revenue (against the previously expected Ft 45billion). The result is due to the spread of cheap canned lager beers and a huge leap in certain costitems, e.g. there was Ft 3 million more spent on advertising. Production profit fell to Ft 1 billion from 3.2,after-tax income dropped to Ft 909 million from ft 2.7 billion. The company is not likely to pay dividends,although they could afford it. (NG 11, 12) K.H.

Union’s good year Insurance company Union Biztositó Rt had a income of Ft 9.6 billion last year, which means a 77% risecompared to 2003, said CEO-Chairman Miklós Zsoldos at a press conference yesterday. Life insuranceaccounts for Ft 3.4 billion, while car insurance, which was introduced two years ago, produced Ft 4.6billion (including Ft 3.4 billion of third-party liability). Low prices have won over tens of thousands of clients from big insurance companies, e.g. Allianz. Union manages 220,000 contracts altogether. Unionexpects a lower, about 50 % expansion for 2005, based on the plan to sell other products to clients withcar insurance. (NG 5) K.H.

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HTCC takes out loan for PanTel Hungarian Telephone and Cable Corp (HTCC), one of Hungary’s alternative landline carriers, saidyesterday that it has taken out a Euro 170 million loan from Calyon Bank, WestLB and Hungary’s MKBBank. HTCC will use the money to buy the remaining 75% stake in PanTel, another alternative telco,and pay off debts. HTCC will draw Euro 150 million of the loan by the end of February. By closing thepurchase of PanTel, HTCC plans to consolidate the alternative telco market in Hungary and becomethe most efficient full service telecommunications provider in Central Europe, Ole Bertram, HTCC’sCEO, said in the statement. HTCC has 668,000 subscribers in its operating areas. (Econews)

Electricity workers threaten strikeHungary’s electricity industry workers have threatened to strike unless they can conclude an agreementon this year’s wages with their employers by the end of February, head of the Electricity IndustryWorkers’ Trade Union Association (VDSzSz) Rezs? Gál said yesterday. The workers are demandingeither an 8% wage rise, retroactive from the start of the year, or a 6.5% wage rise now and another 2.5% increase at the end of the year, if business targets are met. Employers are offering workers a6.5% annual wage rise. The unions said they would issue a call for a strike at the end of February if their demands were not met. (Econews)

Protesting pig farmers About 50 farmers representing three farmers’ associations demonstrated in front of the Parliamentyesterday. They are demanding that Ministry of Agriculture and Rural Development keep its promiseconcerning the payment of land-based subsidies and pay the promised referential price for agriculturalproducts. They also want the government to set up an agricultural forum to discuss long-term plansconcerning the branch. The existing forms of negotiation are not able to fulfill their duty, chairman of National Association of Pig Farmers (MSSz) Antal Sákán said. The farmers will keep on demonstratinguntil Feb 25 if their claims are not met. (Nb 6) G.R.

Economics

Low Jan inflation aided by food prices Analysts polled by MTI yesterday attributed January’s better-than-expected 4.1% yr/yr inflation figure toa high base, the strong forint and a low rise of food prices. Encouraged by the strong showing, theanalysts put February inflation at 3.5-4.0% yr/yr. ‘I cannot remember a January when the price of flour fell over one month and the prices of bread and baked goods hardly increased’, Gergely Forian Szabóof CA-IB Fund Management said. Food prices rose a mere 2% yr/yr due to the ‘flood of imports’ and thestrong forint. Household energy prices rose, in contrast 10% yr/yr yet before the increase of gas andelectricity prices in February, Forian Szabó noted, but still predicted a year-on-year inflation rate of 3.5% in February. (Econews; NG 3, MH 11, Nv 6, Nb 16)

EU recommendations on budget agreed The European Commission said yesterday that Hungary had agreed to recommendations made by theEU executive, which this week said Budapest should cut its budget deficit faster with a view on joiningthe euro area. ‘I have the firm and clear commitment of Finance Minister Tibor Draskovics to do all inour recommendation to fulfill these goals,’ European Economic and Monetary Affairs Commissioner Joaquin Almunia told a news conference in Brussels. Almunia said that there are now no specificnumerical recommendations regarding fiscal deficit targets. (Econews; NG 1,3, Wed Vg 3)

FinMin proposes fast comparison of tax Hungary, Germany and France have sent a joint letter to EU finance ministers to enhance the work oncomparing Europe’s different tax systems, Finance Minister Tibor Draskovics said yesterday. If similar tax problems arise in several member states, they should study them together, Draskovics said.Draskovics said that negotiations in Brussels on reforming the stability and growth pact finallyaddressed the effects of structural reforms on new member states’ fiscal budgets. This is the result of aHungarian initiative, he said. (Econews; NG 2,3, Nv 6)

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Plenty of steam left in Bp market The Budapest bourse again witnessed frenetic trade and big volatility with OTP bank Rt at center-stagewith a 5% swing from its interday highs and lows. The headline index’s exponential upward curve seensince the start of February stayed on track as the BUX reached a new landmark high. Hungarian stocksYTD have done noticeably better than their regional peers having risen 14 % in dollar terms comparedto Prague’s top 50 or Warsaw top 20, whose values grew 8 and 1.6 % respectively. A colossal amountof foreign institutional capital has been recently allocated to the CEE region and particularly Hungarianstocks such as OTP bank Rt and fuels group MOL Rt. (Econews; Nb 16)

NA Rt takes out larger loanThe National Motorway Rt (NA) is about to take out a Ft 125 billion loan, a larger loan than the onepreviously announced . The loan is to enable them to pay the Ft 137 billion the central budget countson as revenue. This sum covers the costs the government has already paid for roads just finished or still under construction. In the meantime the future investor in motorways State Motorway Rt (ÁAK) hasto find financial resources, probably by issuing bonds, to purchase NA Rt’s means and rights, thenfinance new construction. This ensures that both the central budget and the constructors are receivetheir money sooner. (NG 4) K.H.

OECD to set up regional training center The head of the Hungarian Competition Office (GVH) and the deputy of the general secretary of theOrganization for Economic Cooperation and Development (OECD) signed an agreement in Parisyesterday to set up a Regional Training Center for Competition in Budapest, GVH said yesterday. Thecenter will assist countries in Central and Southeast Europe to develop competition policy andlegislation. The center will give Hungary a leading role in assisting transitional economies in the region.(Econews; Nv 6)

Sub-regions look to double state subsidy Hungary’s sub-regions may get twice as much state subsidy, a total of Ft 15.4 billion, this year than lastyear, the Minister of Internal Affaires Mónika Lamperth announced yesterday. Ft 6.4 billion of thisamount is set aside for newly formed local groups or associations. Out of the 165 existing sub-regions,there are already 118 associations, which shows a good beginning. Lamperth said the fact thatregulations are not yet clearly identified and that the difference among regions, which is enormous,might cause a problem. In the Alföld, towns are 20 kms from each other, while in Somogy county, sub-

regions are defined by villages with a population of just a few hundred. (NV 3) E.C.Investment fund assets up 4.1% in Jan Assets of Hungary’s investment funds rose 4.1% in January to Ft 2,992.99 billion, the Association of Hungarian Investment Fund Managers (Bámosz) said yesterday. Investment funds had assets worth Ft1,138.46 billion, pension funds had assets worth Ft 1050.12 billion, and assets in other portfolios wereworth Ft 804.41. Investment funds grew 7.7% during the month, with assets of financial marketinvestment funds rising 8% to Ft 324.334 billion. Assets in bond funds also increased 7.7% to Ft 520.16billion. Stock funds grew 7.9% to Ft 139.18 billion, and assets of mixed funds increased 7.5% to Ft48.15 billion. (Econews)

Politics

Gov’t: Orbán’s tax scheme would mean lossesOpposition party leader Vikor Orbán’s tax reduction program would amount to a total budget incomeloss of Ft 930 billion, government spokesman András Batiz stated. The PM, currently negotiating inMoscow, directed his colleagues to examine every single proposal Orbán presented during his countryappraisal speech. Batiz explained that a loss of Ft 38.7 billion on income taxes, Ft 52.7 billion ondividend tax, Ft 4.2 billion on EVA, and Ft 445.5 billion on VAT would occur on the potential introductionof Fidesz’s tax proposal as they only focused on expenditure and disregarded the sources. Accordingto ex-finance minister Mihály Varga, MSzP has no intention of reducing taxes. (MH 3) E.C.

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Putin promises to hand back booksPM Ferenc Gyurcsány met Russian president Vladimir Putin yesterday. They agreed that by next MayRussia will hand back the books from the library of Sárospatak College (North-Eastern Hungary), whichwere taken by the Russian army in 1945. The debate on the return of the invaluable collection has beena bone of contention between the two countries for 15 years. Putin also stated that the contracted oildeliveries to Hungary will be secured independent of the changed situation of oil company Yukos. (Nb1) G.R.

PM, rival held back plenty Rival speeches by Prime Minister Ferenc Gyurcsány and opposition Fidesz Chair Viktor Orbán thisweek were not yet calls-to-arms, kicking off the 2006 election campaign, a panel of political punditsagreed yesterday. The team, including political scientists, sociologists, economists, lawyers,philosophers and historians, agreed that neither politician could be declared the winner and neither hadbeen ready to begin a 2006 election campaign shoot-out. (MTI)

Domestic

Roma situation worsening The situation of Roma in Hungary keeps on worsening, according to a report, which was publishedyesterday. The study was made by Public Fund for European Comparative Research on Minorities onthe request of Minister for Equal Opportunities Kinga Göncz. It also stated that the gap between theliving conditions of Roma and non-Roma people is getting wider despite governmental programs. Theprograms for supporting employment of Roma people are ineffective, and minorities are still notrepresented in the Parliament despite clear statutory obligation. Only Education Ministry measureswere positively appraised. (Nb 8) G.R.

‘Drug users need treatment not sanctions’ The problem of drug abuse calls for comprehensive treatment rather than legal sanctions, a statesecretary at the Justice Ministry said yesterday. Miklós Hankó Faragó said the best drug policy was onewhich focused on the health and social aspects of the problem as well as prevention. This is also whatthe European Parliament has deemed most successful way to combat drug abuse, he added. Usersand dealers are a different matter entirely, Hankó Faragó said, adding that the latter should be severelyprosecuted. Hankó Faragó praised the existing treatment referral scheme, which moves offenders intocompulsory treatment rather than charging them as criminals. He criticized the Fidesz government for advocating a drug policy based on legal sanctions between 1998 and 2002, which, he said, producedabsolutely no results. (MTI; Nv 4)

Hungarian Gripen takes to the skiesThe first Gripen fighter airplane built for Hungary has taken its first flight in Sweden. After further testsfive aircraft will be delivered to Hungary in March 2006, the remaining nine by Dec 2007. The Gripenswill be leased by the Hungarian army between 2006 and 2016; after that they will pass into Hungarianproprietorship, according to the 2003 contract. A few weeks ago the first group of Hungarian pilotsbegan their training in Sweden. (Nb 1) G.R.

X-ray bus arrives in Hungary Budapest-based US ambassador George Herbert Walker handed over a Mercedes Benz Springer 413

CDI worth Ft 34.5 equipped with a special x-ray machine to János Nagy, chief of the Customs andExcise Office (VPOP). The bus is fully sponsored by the American State Department, and it aims tohelp Mid and Eastern European countries to develop export control programs and to prevent thespreading of materials used to produce weapons of mass destruction. The ambassador added: wewould like international criminals to know that Hungary has the knowledge and equipment necessary tofight against these crimes. (NV 5) E.C.



7days, 2005. február 21

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