News

(Bloomberg) -- Hungary is expanding its interventions into the market economy in areas ranging from bond funds to banking, as the government seeks to revive growth after last year’s recession.

The cabinet now sees output expanding 2.5% this year, Economy Minister Marton Nagy said at a briefing in Budapest, outlining forecasts for next year’s budget. That’s significantly lower than the 3.4% growth it previously anticipated, but still more optimistic than analyst expectations compiled by Bloomberg.

With inflation also above earlier projections and the budget deficit regularly overshooting previous targets, Nagy has been spearheading interventions in several areas to improve indicators. They included regulation to curb food retailers’ margins, followed by a proposal last week to force institutional investors to buy more government debt, which sent the forint falling and bond yields gyrating.

At a briefing on Monday, Nagy said the measure on funds was necessary because a previous reliance on securities issued to households is more expensive than institutional financing. The government will present a draft bill to lay out details this week.

“Retail financing has always been key to increase stability, but that’s the priciest option,” Nagy said.

Shares in OTP Bank Nyrt., Hungary’s largest lender, fell 3.4% after Nagy said the cabinet is also looking to freeze prices of banking services at last December’s level. He is also examining telecommunications costs, expecting providers to reduce them “voluntarily.”