June 29th, 2012

Gov’t sees IMF/EU deal by end-October

Hungary expects to sign a deal with the International Monetary Fund and the European Union on precautionary financial assistance close to market estimates of EUR 15bn by the end of October, Mihaly Varga, the minister in charge of talks with the IMF/EU, said in an interview with Reuters.

“I believe an agreement could be sealed any time from mid-August until the end of October, so depending on whether it is a faster or slower process in terms of talks, this is the period I could see when the papers are actually signed,” Mr Varga told Reuters.

Mr Varga spoke with Reuters late Wednesday, after the IMF voiced its approval of new amendments to Hungary’s central bank act, legislation that has been a sticking point in preparations for the negotiations on the financial assistance.

Mr Varga said he was “personally interested” in reaching an agreement, adding that it would be a “personal fiasco” if Hungary failed to make a deal.

Mr Varga said Hungary was eyeing a flexible credit line that Poland has from the IMF, rather than the standby arrangement neighbouring Romania has in place.

When asked if an agreement could fail if the IMF were to stick to offering a standby loan, Mr Varga said: “We need to see the conditions. The question is what kind of a garnish we have on the table along with the main dish.”

Mr Varga said the deal should be close to market expectations for EUR 15bn, adding that the government was waiting for lenders’ offers and has not yet made a decision.

He said an agreement would reduce Hungary’s borrowing costs and vulnerability to the euro zone crisis. He also said Hungary was not in talks with foreign investors about issuing a foreign bond.


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