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Hungary-IMF deal further delayed

November 20, 2012

The International Monetary Fund (IMF) and the European Commission will wait for the approval of the 2013 budget and then there could be further development in the current negotiating stage, Hungary’s chief aid negotiator Mihály Varga said this Tuesday.

Speaking on public radio MR1 on Tuesday morning, the head of the Hungarian negotiating delegation also said there was only a slight possibility that a credit deal with the IMF/EU will be secured by the end of the year.

"How the situation will turn out" in 2013 depends not only on the Hungarian government’s economic policy measures, but also on the decision to be taken in the eurozone and the situation there, Varga added.

Varga was of the view that the talks with the international financial institutions have never broken down, negotiations can take many forms and so the Hungarian delegation keeps contact with the missions of these institutions in person and on the phone, as well. The minister without portfolio noted that he had a personal meeting with the IMF’s mission chief to Hungary last week.

"The government is preparing next year’s budget and we obviously want to know our partners’ requirements, what specific measures they are recommending for the 2013 budget. And we will tell them how we see things, what economic policy decisions we believe are necessary," Varga explained.

He underlined that securing a financial backdrop with the IMF/EU has not become unnecessary, hinting at Prime Minister Viktor Orbán’s Friday remark that the cabinet’s intention is unchanged, i.e. it wants a deal with the international lenders.

Several of the economic measures that Hungary has announced in recent weeks aren't of a sustainable nature and won't help growth, said Iryna Ivaschenko, the IMF’s Resident Representative in Budapest, in an emailed statement to Dow Jones on Monday.

The statement came after the government announced a third set of austerity and tax measures within six weeks.



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