The EU and IMF on Friday cut short talks with Hungary aimed at paving the way for aid discussions, pressuring the government to amend a controversial central bank bill or face possible financing problems next year. Hungary's centre-right government, which broke ties with international lenders in 2010 and pursued unorthodox policies to boost the economy, said in a U-turn last month it would reopen discussions with the IMF and EU amid a deepening eurozone debt crisis, which put its markets under pressure.
Budapest's chief IMF negotiator said after the informal talks were broken off that the government was ready to resume them and was building European Central Bank proposals into the new bank law, which critics said would in its current form undermine the Hungarian central bank's independence. The IMF said it had suspended the talks because the government had shown no willingness to delay the bank law, which the ECB also criticised.
For Prime Minister Viktor Orban, who won power in a 2010 landslide election, returning to the Fund was a severe political blow. But the promise of a new IMF deal potentially worth up to 20 billion euros has helped shore up the forint currency and bonds, and limited damage from a sovereign downgrade to "junk" debt status by Moody's last month.
Comments
Comments are closed for this article.