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Govt wants to agree with IMF as quickly as possible, Fellegi says

History

The government is aware of the gravity of the situation and of what is stake in talks with the International Monetary Fund, minister without portfolio Tamas Fellegi, who is to head Hungary’s delegation at the talks, said on Thursday.

Mr Fellegi said the government’s firm intention is to conclude an agreement as quickly as possible.

The minister without portfolio added that the developments of recent days have not changed the key issue. The government debt remains the main problem, he said.

Mr Fellegi said "we managed to substantially reduce the government debt in the past 18 months, but the forint exchange rate is also a major problem".

Mr Fellegi added "we are not putting our head in the sand, we can see the connections".

Mr Fellegi confirmed that the government wants to finance the country primarily from the markets.

Mr Fellegi said that the government respects the independence of the Hungarian National Bank, which is why National Bank of Hungary Deputy Governor Ferenc Karvalits is participating in talks with the IMF next week.

Mr Fellegi said that the government has made it clear that it is prepared to discuss any issue with the IMF without preconditions, adding that this does not mean that the government is prepared to accept all conditions. He added that a kind of "precautionary stand-by credit" would be acceptable for Hungary, credit that would not necessarily be tapped right away.

He said Hungary’s government was ready to compromise on the possible form of the agreement with the IMF and EU, adding that possible negotiations on a stand-by arrangement had always been part of his mandate.

Mr Fellegi said the government was of the view the country needed an agreement that could provide a safety net.

Christoph Rosenberg, Mission Chief on Hungary said last week in a reply to a Reuters question on whether talks with Hungary would resume in January, that the IMF had informed the government that given Hungary’s vulnerabilities, a Stand-By Arrangement (SBA) with agreed conditionality would be the best for the country.

"Because Hungary does not face an imminent financing need, such an arrangement can be treated as precautionary. Preparatory work on a program cannot continue until the government indicates that it is willing to proceed on the basis of an SBA", Mr Rosenberg said.

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