Vote delay will help IMF talks, Varga says


Hungary’s delay of a vote on amendments to a disputed central bank law will help resolve differences blocking talks with the International Monetary Fund, said Mihály Varga, the country’s chief negotiator.

Financing is guaranteed this year and by 2013 Hungary would like to have a "a safety net" from the IMF, Varga, the minister in charge of relations with international financial institutions, said in an interview with Bloomberg during a World Economic Forum meeting in Istanbul on Wednesday. 

    "This year is guaranteed and by next year we would like to get to the point where Hungary has this safety net in place," Varga explained.
    Hungary may consider selling international bonds while negotiating the loan, Varga said.
    Varga, the premier’s former chief of staff who took his current job on June 1, requested delaying a June 4 vote in parliament on amending the central bank law after the European Central Bank said proposed changes still fail to safeguard monetary-policy independence.
    The delay "give the chance for further negotiations if it’s needed," Varga said. "We are ready to sit down at the negotiating table immediately as soon as" the IMF and the European Union "decide when and under what conditions they want to begin the talks."
    The forint rose 1.2% to 298.8 against the euro as of 4:06 p.m. in Budapest on Wednesday, advancing for a third day. It has weakened 4.2% in the past month, the world’s third-worst performance behind the Malawian kwacha and the Syrian pound.
    Some economists have said Hungary may be emulating a tactic used by Turkey, which discussed a possible IMF loan for more than a year and a half until the government announced in March 2010 that it no longer needed a backstop.
    "I would like to categorically refute" assumptions by some market participants that the government isn’t really seeking an agreement, Varga said. "Hungary isn’t preparing for a negotiation that isn’t going to lead to an agreement. We would like a good agreement that’s beneficial for the country and reassures the IMF and the EU that Hungary is a reliable partner," Varga added.

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