Hungary has no preconditions for IMF talks, PM says – Part 2


As Parliament has adopted legislation constituting the new economic system, there will be no economic laws on Parliament’s agenda in the next months, and "everyone can be certain that the government will not submit any bills regarding the economy during the talks", Prime Minister Orban said.

Answering the question whether the country will be able to stand on its own - as he had said before - if no agreement is reached with the IMF and the EU, Mr Orban said every condition exists for a speedy agreement, and this is also in Hungary’s interest, but the government must make it clear that its aim is not just to avoid the crisis, but also to implement a successful growth plan. Therefore, the government’s economic policy is based on three main principles: the division of burdens, the restructuring of the inefficient systems constantly regenerating debt and the reinforcement of the "working and child-raising middle classes, including pensioners", Mr Orban said.

It is an important tool in reinforcing the middle classes, he said, that the proportionate tax system supporting working and child-raising families has been integrated into the stability act and thereby received strong legal protection.

Answering the question as to whether he believes "this year’s budget will remain intact until the end of this year, Mr Orban said the chances are good as the budget contains substantial reserves, and the government has done its best to ensure the stability of the forint and the banking system.

Any further tools are in the hands of the central bank which is responsible for preserving the value of the forint and the stability of the banking system, the prime minister said, adding that this is exactly what he means by the independence of the central bank - that nobody can take these tools from the central bank. This is why they agreed with central bank governor Andras Simor that "until the forint recovers", the central bank governor and National Economy Minister Gyorgy Matolcsy will consult daily in order to restore confidence in the forint, Mr Orban noted.

The prime minister repeated his earlier comment that the value of the forint is currently not determined by the actual performance of the Hungarian economy, but influenced by a series of speculative attacks, which also require the cooperation of the NBH and the government. The extent of the country’s exposure to such attacks depends on the size of the government debt, Mr Orban said, criticising the previous governments for increasing the debt, especially through taking on foreign exchange debt.

 The prime minister remarked that Hungary is not alone in being targeted by speculative attacks, but the entire euro-zone and the European Union are also targeted. The prime minister said that although "we are currently in a period of downgrades, the season for upgrades will follow later on".

 Responding to rumours concerning the bank accounts of private individuals, Mr Orban said the government regards these as private contracts between individuals and their banks that were not the government’s business. The prime minister also warned that "spreading rumours about bank accounts is punishable under the penal code".

Mr Orban said more than 40,000 public sector workers had asked their employers to help them participate in a government scheme allowing early repayment of foreign currency-denominated mortgages at discounted exchange rates. National Economy Minister Gyorgy Matolcsy is in talks with banks which lent to public sector workers en masse, he added.

Mr Orban urged public sector workers to ask their employers for assistance to participate in the scheme in a letter sent in late December. He added that the government wanted to help by offering public sector workers forint loans with preferential rates.

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