• Top economists say bank's programs break rules on universities
  • National bank says foundations transparent, not tax-funded

A group of prominent economists at the Hungarian Academy of Sciences criticized the central bank’s educational programs, saying they promote the views of its leadership at public expense and breach rules governing universities. The bank rejected the allegations.

The academics’ criticism concerns about 200 billion forint ($692 million) earmarked by the National Bank of Hungary from its profits for foundations set up to support the teaching of economics. The monetary authority is also helping establish a new university campus in eastern Hungary. The funds’ endowment is roughly on par with the government’s annual spending on all state higher education combined.

The central bank’s initiatives are illegal, go against international norms and circumvent established quality controls for higher education, the Economics Committee of the academy said in a letter published on its website. Members of the panel include Attila Chikan, a former minister under Prime Minister Viktor Orban’s first government that ruled until 2002, the academy website says. Julia Kiraly, a vice governor at the central bank until 2013, who has criticized the authority’s current policy, is also a member, along with other former central bankers, the website shows.

"Public money is being used by the central bank without control," the committee wrote. "The autonomy of the supported institutions is hurt as they need to adhere to the open or implicit expectations of the donor to win and maintain financial support."

Governor Gyorgy Matolcsy, a close ally of Orban who has advocated "unorthodox" policies instead of what he sees as "outdated neoliberal" views, has said the measures are in line with international practices.

"The National Bank of Hungary and its foundations operate transparently and the educational programs don’t endanger scientific autonomy," the central bank said in a statement on its website on Friday. The program isn’t financed by taxpayers, it said.

Matolcsy has also defended the bank’s $108 million artwork program, including the acquisition of a painting by Titian, and a series of real-estate purchases in central Budapest and beyond. Before Matolcsy’s tenure, any earnings by the central bank traditionally flowed into the government budget.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE