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IMF preparatory talks to start early January

December 31st, 2011

Népszabadság thinks the government may put the badly needed IMF credit line at risk, rather than complying with Western demands. Magyar Nemzet, on the other hand, argues that the Hungarian economy would be in good shape had it not been for the IMF-loans taken out by the former Socialist government.

Hungary would like to start negotiations with the IMF in early January –PM Viktor Orbán said on Friday, calling those talks „important, but not crucial.” Speaking on national public radio, Mr Orbán said no one in the world was entitled to prescribe to elected Hungarian legislators what kind of laws they are supposed to pass. The government would listen to criticism, he continued, but „will politely refuse” attempts to divert it from its targets. On the subject of a possible deal with the IMF, the PM said that if Hungary is granted a “safety net”, it will “feel more confident and secure” during the upcoming period, but “will cope” even without an IMF credit line. In an interview published on Christmas Eve, he told Magyar Nemzet that verbal spats were quite normal before financial negotiations.

Népszabadság predicts that should the government fail to reach an agreement with the International Monetary Fund, the country might be in big trouble by next spring.  Nonetheless, commentator Zoltán F. Baka suspects that the government may reject the preconditions set by the European Union and the IMF, because it fears that those demands would jeopardise the bare essentials of its “unorthodox” economic policy. The cabinet is convinced that without a strong and centralised power, it is impossible to stand up for Hungary’s interests, while international critics demand less centralisation and more checks and balances.

In case the IMF deal does not materialise, the government will badly need access to the foreign currency reserves of the National Bank: 4 billion Euros out of the 35 billion in Forex reserves would be sufficient for some time. The problem is that the European Union stands firmly in the way of any practices which harm the independence of the National Bank. Baka concludes that it does not make sense to insist on that plan. Unless Mr Orbán is ready to leave the European Union – “which  would indeed be a uniquely unorthodox move.”

In Magyar Nemzet, Matild Torkos complains that Hungary is getting exceptionally tough treatment from the IMF at the very moment when it succeeds in keeping its public deficit below the 3 per cent benchmark. Previously, Socialist governments plunged the country deeply into debt but were treated with kid gloves. Torkos admits that Hungary is vulnerable and badly needs a credit line from the IMF, precisely because of the debt accumulated by former Socialist governments. Now the left-wing forces, ousted from power last year, would like to place Hungary under the trusteeship of the IMF, which, the right-wing commentator contends, is determined to gain a firm hold over Hungary’s economic and even tax policies.

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