Hungarian President Pal Schmitt says his county remains committed to adopting the euro because the current financial crisis in Europe is not caused by the common currency, but by overspending by some European nations.
“There’s an ancient Hungarian saying: ’Do not stretch your blanket beyond what it can bear,’ ” he said Thursday in an interview with The Washington Times.
“In Hungary, we also need to take heed of this saying.”
Mr. Schmitt cited a provision in Hungary’s new constitution that caps the country’s debt-to-GDP ratio at 50 percent.
He noted that before Hungary can adopt the euro, it has to meet certain criteria on debt, inflation and long-term interest rates required by the Maastricht treaty that set up the currency in 1999. The euro is the common currency of 17 of the 27 nations of the European Union.
“It continues to be in our interest that we become members of the monetary union,” he said. “Not only our reserves, but our international contracts, our international trade, is conducted significantly in euros, so therefore it is in our interest to keep a strong euro.”
“We’re still far from being able to join,” he added, predicting that Hungary will not adopt the euro until “close to the end of the decade.”
The president’s comments come amid economic distress in Hungary, which will seek assistance from the International Monetary Fund in talks early next year.
Moody’s downgraded Hungary’s bond rating to junk status last week for the first time in 15 years, accelerating the recent plunge of the Hungarian currency, the forint. The Hungarian currency has lost 13 percent of its value against the euro since July, reaching a record low on Nov. 14.
Mr. Schmitt cited the forint’s volatility as one of the key reasons for adopting the euro.
“The stability of the currency obviously provides greater stability for every member of that union,” he said. “I feel even now that belonging to the eurozone provides some sort of safety.”
Mr. Schmitt’s vote of confidence in the euro comes amid predictions of the currency’s demise. Financial woes in Greece, Spain, Italy and other eurozone members have led some observers to question the wisdom of preserving the monetary union, which has prevented recessionary economies from spurring exports by devaluing their currency and required large bailouts from the zone’s strongest members.
In the interview, Mr. Schmitt also defended the country’s new constitution against criticism that it contains anti-democratic clauses.
The constitution, which Mr. Schmitt signed in April, recognizes the country’s Christian roots, states that life begins at conception, defines marriage as a union between a man and a woman, and restricts voting rights for citizens with “limited mental ability.”
During a July news conference with Prime Minister Viktor Orban, Secretary of State Hillary Rodham Clinton said that she had encouraged Hungary “to ensure a broad, inclusive constitution that is consistent with its own democratic values and the European values as well.”
Mr. Schmitt said he was unfazed by the criticism.
“Should Madame Clinton worry about democracy, she rightfully does so because the traditions of democracy are the strongest and the oldest in the United States,” he said. “We look upon this as a friendly sort of warning, rather than a strong criticism. We are being careful that there would be no reversal of democracy.”
Mr. Schmitt, 69, is a two-time Olympic fencing gold medalist. He became president in August 2010.
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