Orban ally named as head of Hungary's central bank

Hungary's Prime Minister Viktor Orban on Friday named a close ally, current Economy Minister Gyorgy Matolcsy, as the new head of the country's central bank. Matolcsy is seen as something of an economic maverick behind many of the government's more "unorthodox" policies like nationalising private pension funds and imposing "crisis taxes" on certain sectors. Investors worry that the new bank head will focus too much on getting Hungary out of recession and not enough on battling inflation. Matolscy will replace Andras Simor, whose six-year-term was marked by frequent clashes with Orban's government over state interference in monetary policy and the independence of the bank. Rumours that he would be named to head the central bank sent Hungary's currency, the forint, falling in early February. Orban announced the Matolscy's appointment in his weekly interview on state MR1 radio. "The new president of the central bank will be heard in parliament this afternoon: it is Gyorgy Matolcsy," he said. The premier said that Matolscy will be replaced as economy minister by minister without portfolio Mihaly Varga, who has been leading Hungary's negotiations with the International Monetary Fund over on a 15-billion-euro credit line ($19-billion) for the central European country which broke down late last year. Varga, currently Minister without portfolio, has been leading the negotiations with the IMF. His nomination was widely forecast by analysts and financial markets, who consider the appointment a "bad choice". According to analysts at Capital Economics in London, William Jackson and Neil Shearing, Matolcsy's nomination will be interpreted by the markets as a takeover of the bank by Orban.