Gov t finds pay cap does not hurt central bank s independence

The cabinet established that consultations on the pay cap had taken place with the National Bank of Hungary (NBH) and the European Central Bank (ECB), in line with regulations, Szijjarto said.     

    In the spirit of mutual responsibility and sharing the burden, nobody should shirk participating in the mitigation of the country s financial and economic difficulties caused by the previous government, he added.

    Since the pay cap applies to all budget-financed institutions and does not involve regulations that would apply specifically to the NBH, the decision does not violate the principle of central bank independence, Szijjarto said.

    The ECB said on Monday that the government must consult with the NBH on an amendment capping public sector salaries in order to protect the bank s autonomy. The amendment, which caps public sector salaries at 2 million forints a month, or ten times the average gross monthly salary for the national economy, would reduce NBH governor Andras Simor s current salary by about 75 percent.

    "To protect the NBH s autonomy in staff matters, part of the principle of central bank independence under Article 130 of the Treaty, the Hungarian authorities have an obligation to ensure that any amendment to the legislative provisions on the remuneration of the NBH s staff is decided in cooperation with the NBH, taking due account of the NBH s views," the ECB said.