Hungary's incoming leadership, led by Prime Minister-in-waiting Peter Magyar, is pushing to return the country to the European Union mainstream and repair strained ties with Brussels. A central part of this mission is a plan to prepare for euro adoption by the end of the decade.

However, experts warn the timeline is overly ambitious. The central bank governor and economists point to a weak economy and fiscal mess left by outgoing Prime Minister Viktor Orban. Sili Tan of the Economist Intelligence Unit stated: "We do not expect euro adoption within the next decade."

The biggest challenge is meeting the Maastricht criteria on inflation, debt, deficit, interest rates, and currency stability. Hungary currently falls far short on all fronts. Deep cuts to government spending needed to tame the deficit are seen as "impossible" by 2030, according to Tan, especially as Magyar has committed to continuing many of Orban's fiscally profligate policies while boosting defense spending.

Despite the hurdles, public support is high: 75% of Hungarians favor adopting the euro, though many acknowledge the country is not ready. Julia Kiraly, former deputy central bank governor, noted: "A 2030 entry date may seem ambitious, but it's not impossible."

Potential benefits include increased stability for the forint, lower inflation and interest rates, reduced borrowing costs, elimination of exchange-rate risk, and support for Hungary's export-heavy economy. The trade-off would be loss of monetary policy autonomy and shock absorption capacity, but access to eurozone liquidity and bailout facilities would provide a safety net.

Eurozone members are likely to be wary due to Hungary's weak economy, 16 years of institutional deterioration, and the memory of the Greek debt crisis. There are fears Hungary could reverse course or become disruptive within the single currency area. Analysts at Capital Economics noted: "Hungary is likely to be regarded skeptically."

EU officials have welcomed the move. European Commission President Ursula von der Leyen praised Hungary's "return to the European path," while ECB President Christine Lagarde said that path leads naturally to the euro. Hungary committed to adopting the euro when it joined the EU in 2004, but remains one of three countries (along with Czechia and Poland) yet to do so.

Source: www.dw.com