July 19th, 2012

IMF negotiator Varga says talks “calm”, denies government growth targets unrealistic

The first round of negotiations with the International Monetary Fund on Tuesday was calm and matter-of-fact, Mihaly Varga, Hungary’s chief negotiator for credit the country is seeking from the IMF and the European Union, said in an interview in the fresh issue of business weekly Figyelo.

Mr Varga said the parties had agreed not to comment during the course of the negotiations.

The stands of the parties will be better laid out in the coming 2-3 days, he said, adding that closing consultations would take place before the delegation leaves next week.

Speaking about the course of the talks till now, Mr Varga said the government had presented their macroeconomic projections for 2013 and 2014, while the representatives of the IMF, EU and European Central Bank had expressed their own views of the situation.

Asked about possible outcomes if a common denominator is not found at the talks, Mr Varga said the government could get up from the table and say they would rather come back later; the government could accept the IMF’s numbers, which he called “unlikely”; or the government could convince the IMF and possibly wait until Q2 GDP data are published and continue the talks on the basis of this.

The IMF/EU delegation will have 50-55 meetings during the week they are in Budapest, speaking with representatives of different institutions, government officials, the mayor of Budapest and people from the National Bank of Hungary, Mr Varga said.

Asked with whom the delegation would meet at the National Economy Ministry, as portfolio head Gyorgy Matolcsy is on vacation, Mr Varga said there would be several meetings with representatives from the ministry. He added that a meeting with Mr Matolcsy was “possible”.

Mr Varga reiterated that Hungary is seeking an agreement with the IMF/EU on precautionary financial assistance.

“We are in the fortunate position that since 2008, the IMF’s product palette has been expanded. The EU is proposing 2-3 new credit structures that are similar to the IMF’s products,” he added.

An IMF official said a week ago that the IMF would negotiate with Hungary on a Stand-By Arrangement but acknowledged that the country would treat the credit as precautionary.

Growth targets realistic

Varga also said the Hungarian government’s economic growth target of 1.6 percent for next year is realistic and is among the assumptions discussed at a meeting with the International Monetary Fund.

In an interview published in Thursday’s edition of business weekly Figyelo, Varga said an earlier ministerial comment that growth in gross domestic product could hit 2 percent in 2013 was not a target included in the main figures of the budget, and the 1.6 percent figure was the basis on which the government would make its plans.

He said a debate had emerged over how well founded the main figures of the budget were.

“Even so, I am able to start out [with the position] that the main figures of next year’s budget exist. Whether these convince the IMF or not will become apparent; in all events, I will be working to ensure they are accepted,” he said.


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