July 19th, 2012

Opposition says government not serious about agreeing bailout with IMF


The main opposition Socialists said on Wednesday that the government had no real intention of signing a loan agreement with the International Monetary Fund but was playing for time by engaging in talks.

Tibor Kovacs, the deputy chair of parliament’s economic committee, called on the government to make public the programme that it had prepared for the talks. If the cabinet does not want to “lay its cards on the table” before the public, it should at least brief the economic or budget committees or call a meeting of party group leaders, he said.

The radical nationalist Jobbik party said they expected the IMF “to charge a high price” for financial assistance. Jobbik deputy group leader Janos Volner told reporters that the IMF could request further austerity measures and the introduction of new burdens, such as a property tax.

Reflecting market optimism over Hungary’s talks with the IMF/EU, the cost of insuring the country’s sovereign debt against default fell to around 478-480 basis points in London trading, for the first time this year.

The Hungarian currency strengthened to 284.5 against the euro, 237,0 to the Swiss franc, and 231,1 against the US dollar early on Wednesday evening.

State Secretary at the Economy Ministry Gyula Pleschinger told MTI on Wednesday evening that it was obvious that both sides were working to come to an agreement.

Pleschinger added that Wednesday’s talks focused on generic issues, with more detailed discussions to follow.

The government started negotiations on Tuesday with a delegation of the IMF, while representatives of the European Union are scheduled to join the talks today.

Government officials said an agreement on a 15-billion-euro loan, which Hungary is treating as precautionary, could be expected by around October. Analysts earlier told MTI a fast result was unlikely, however.

Zoltan Torok, senior analyst at Raiffeisen Bank, told MTI on Tuesday that talks were likely to be drawn out as the government did not see a need to change its economic policy while international organisations were seeking changes.

Only four out of twelve economists polled by Bloomberg news agency predicted that a deal with the IMF would be struck by October, six said an end-of-year agreement was possible and two economists expected the deal to be signed next year.


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