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IMF expected to grant Hungary €10-15 bln credit line

History

The International Monetary Fund (IMF) will soon be ready to grant Hungary a two-year credit line of €10 billion-15 billion, the daily Magyar Nemzet said on Saturday, citing unnamed diplomatic sources.

The deal could be signed three weeks after the government resolves its dispute with the European Union, the paper said.

The stand-by loan will be limited to two years as IMF insists that the government to be formed after the 2014 elections should confirm the pact if it seeks to continue cooperation with the organization.

A decision on the size of the loan has not been made yet and the IMF expects the EU to cover a third of it, the paper said.

Before official talks can begin, the IMF has asked the government to amend the central bank law to ensure the National Bank of Hungary's independence.

The issues of the pay of central bank governor András Simor and the oath-taking obligation on the part of the bank's leadership are not as important to the IMF as the issue of the bank's independence and the appointment of a third deputy governor, the latter to which it objects, a diplomat said.

According to the paper's sources, the IMF would not insist on the flat-rate personal income tax being scrapped, but it objects to the policy being enshrined by cardinal law requiring a parliamentary two-thirds majority.

The IMF also sees a need to improve employment conditions, making taxation more transparent and the restructuring of public transport and the public sector, the paper said.

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