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Hungary to negotiate for precautionary financial package from IMF-EU

Hungary will negotiate as it intended for a precautionary financial package that will serve as a safety net, not a loan to tap, from the International Monetary Fund and the European Union, Minister Without Portfolio Tamás Fellegi said at a press conference on Wednesday.

Speaking after the European Commission decided that Hungary had taken "sufficient action and commitments" with regard to an infringement procedure on the independence of the country's central bank to start negotiations on the assistance, Fellegi said Hungary was sticking to its original aim to seek precautionary assistance.

Fellegi suggested that the Commission's use of the phrase "precautionary balance of payment assistance" in its statement on Wednesday was an acknowledgment of this aim.

He said five parties will participate at the talks: the government, the National Bank of Hungary, the IMF, EC and European Central Bank. He added that the same parties participated at talks preparing for the official negotiations.

Fellegi said the size of the loan would be part of the negotiations. Answering a question about Hungary's flat-rate tax, he added that the Hungarian side would not initiate the discussion of the tax system at the talks, but it could come up. The government has no intention to change the flat-rate tax system, Fellegi said. He added, however, that the government was willing to discuss any issues that were relevant to the loan.

He said Hungary would comply with possible decisions taken by the European Court of Justice on infringement procedures regarding the independence of the data protection authority and the retirement age of judges. 

A European Commission spokesman said on Wednesday that the body had decided to refer the two infringement procedures to the Court of Justice.

Fellegi said concerns voiced earlier by the ECB over the MNB governor's remuneration and oath were "questions of principle" and Hungary would defend its stand on these matters in court, if necessary.

He said the government reserves the right to expand the number of MNB rate-setters and add a third deputy governor to its staff, but it would not do so until the mandate of MNB governor András Simor expires in March of next year.

Fellegi said such talks on financial assistance normally take several weeks, but in light of the current international financial situation, they could require more time than usual.

Now that a political decision has been taken, the next step is for a timetable for the talks to be laid down at expert-level, he said. Afterward, the question of meeting times can be discussed.