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Is the IMF stonewalling loan talks?

March 27th, 2012

A pro-government columnist wonders whether the IMF is delaying the start of credit line negotiations with Hungary, in the hope that the financial markets will put the country under increased pressure, so that the government will give in and accept all the conditions dictated by the IMF.

We still do not know exactly what the IMF and other international organizations expect from us in order to reach a credit line agreement, Tamás Nánási writes in Magyar Nemzet.

While the left questions the government’s desire to reach an agreement with the IMF at all (see BudaPost March 23), Magyar Nemzet speculates  that  the IMF is boycotting the credit line talks. According to the pro-government daily, the IMF is counting on the possibility that the current optimism will soon evaporate from the international financial markets, and with the recurrence of fears about economic decline in Europe, the highly indebted economies, including Hungary, will again be put under pressure. If this happens, the Forint will plummet again, and the government will have no option but to meet all the requirements proposed by the IMF in return for the credit line agreement.

Nánási finds it strange that the IMF has so far only talked about its demands in personal discussions with representatives of the Hungarian government, without ever formally submitting the requests in writing.

The right-wing columnist also hints that the IMF seems to be interested not only in the structural reforms of the Hungarian government, which are expected to stabilize the budget, but also advocates the interests of foreign companies in the country. He notes that Christine Lagarde, Director of the IMF, during the preliminary talks with the Hungarian government seemed to be highly concerned about the profitability of French and German energy and utility providers, some of which local councils intend to buy out and nationalize.

All this suggests that the IMF may want to break Hungary and force its government into unconditional submission, Nánási fears. In this case, all the austerity measures and the structural reforms introduced by the Orbán government to reduce deficit may not prove enough to reach an agreement with Hungary’s creditors.

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