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2011-09-19

A cooler climate for investors

On occasion, the government shows scant concern for legal certainty and the rule of law, thus encumbering long-term calculations of returns on investment with the looming possibility of arbitrary taxes or other explicitly or effectively punitive action.
A cooler climate for investors

The government’s decision to let the holders of Swiss franc-based credits repay their loans early at a far below market rate of exchange sent a shock through the banking system. While the early reactions predicting the collapse of the entire banking system were over the top (and the government also provided some relief by tightening requirements for debtors and consequently softening them for banks), the plan itself, the lacking consultation about it and the vehement rejection of any criticism shows a pattern that is probably disquieting for potential investors. On occasion, the government shows scant concern for legal certainty and the rule of law, thus encumbering long-term calculations of returns on investment with the looming possibility of arbitrary taxes or other explicitly or effectively punitive action.

Policy Solutions' analysis on the government's unfriendly moves towards foreign investors can be downloaded from here.



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Policy Solutions is a progressive political research institute based in Budapest. It was founded in 2008 and it is committed to the values of liberal democracy, solidarity, equal opportunity and European integration. The focus of Policy Solutions’ work is on understanding political processes in Hungary and the European Union. Among the pre-eminent areas of our research are the investigation of how the quality of democracy evolves, the analysis of factors driving euroscepticism, populism and the far-right, and election research. 

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