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IMF-talks: decision hailed as pragmatic

November 19th, 2011

Magyar Hírlap believes that following a series of warning signs, the cabinet’s decision to initiate talks with the International Monetary Fund was a pragmatic one.

Hungary’s government will begin negotiations on a new type of cooperation with the International Monetary Fund – the economy ministry announced on Thursday, bringing immediate relief to the markets. The Forint gained over two percentage points in a period when analysts had feared a further slump, connected to S&P’s threat to downgrade Hungary’s sovereign debt. Earlier speculation assumed that PM Viktor Orbán would not resign himself to resuming talks with the IMF any time soon (See BudaPost, November 17).

In the headline of its editorial, “Pragmatica sanctio”, Magyar Hírlap likens the decision to a decree by Charles III, Emperor of Austria and King of Hungary who, in the absence of a male heir to the throne, enshrined the possibility of female inheritance in 1723.

At a time when Hungary had become a negative lead story in Wall Street Journal and Financial Times blogs, and government bonds were being subject to shortings by speculators, “news of the IMF talks was a positive message from a financial point of view, although question marks remain,” writes the paper’s main business analyst, Csaba Szajlai. One of the most important questions is how a future agreement will affect the government’s economic policy.

“Nonetheless, a potential loss of political credibility is still preferable to leaving the country without a penny or devoid of credit” – writes the pro-government daily.

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