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

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 and the country’s forex exposure remain 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. One of the preconditions to that is to reach agreement as soon as possible with the EU and the IMF, he added.

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.

He said earlier that a compromise was expected to be reached between a precautionary credit line, which the government wants, and the Stand-By Arrangement offered by the IMF.

"We have discussed the mandate of the Hungarian negotiating delegation for the talks with the prime minister, the foreign minister, the national economy minister and state secretary Mihaly Varga, and the fundamental decisions for next week’s talks in Washington have been taken," Mr Fellegi said on Thursday.

Mr Fellegi pointed out that he was the only minister with a mandate at the talks, thus his opinion would be the benchmark on which a government stand is taken.

He said that the IMF’s representative in Hungary Iryna Ivaschenko had said that the IMF board would consider the state of the Hungarian economy on January 18, assess the annual economic review and the post-programme monitoring report, but would not discuss the request of the Hungarian government for a new precautionary credit line.

"We trust that the IMF board will make progress concerning the time of the talks too," Mr Fellegi said.