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Fellegi recaps busy fortnight of talks preparing for financial assistance negotiations

Minister without portfolio Tamas Fellegi recapped a "very busy two weeks" of talks preparing for the official negotiations of a financial assistance package for Hungary at a press conference in Brussels on Friday.

Mr Fellegi spoke after trips to Washington to meet with the management of the International Monetary Fund, to Berlin to meet with high-level officials in the German government, to Frankfurt to meet with European Central Bank heads, to Vienna to meet with Austria’s central bank governor and finance minister, and to Brussels to meet with European Commission Vice President Olli Rehn.

The talks were in preparation for the start of official negotiations on the financial assistance from the IMF and the European Union which Hungary is seeking as a precautionary measure that would allow the country to continue to finance its debt on the market.

Mr Fellegi said "all aspects of the economic situation in and around Hungary" as well as what the future of Hungary’s next IMF assistance package had been discussed at meeting with the IMF’s management.

He added that the parties had agreed that there was a "confidence problem on the market including the region and Hungary" and that decreasing growth potential for the region would have a negative impact on the Hungarian perspective as well.

"We also agreed on the fact that we have to come to an agreement on the interpretation and the understanding of the central bank’s independence," Mr Fellegi said.

Hungary’s new Central Bank Act, approved by Parliament late in December, has been a point of contention at the talks on the financial assistance.

Mr Fellegi said Hungary would have to take measures that satisfy the needs of the IMF and the EU as preparations for the talks.

Mr Fellegi said his meeting with Mr Rehn on Friday had been "useful". At the focus of the talks were "critical issues" of Hungarian and EU relations and "what it takes to start the negotiations" on the financial assistance.

He said some of the issues covered at the talks with Mr Rehn were the same as those discussed with the IMF, but that more matters came up in Brussels, including infringement procedures against Hungary launched by the EU early in the week.

Mr Fellegi said both sides agreed that talks must continue on the issues in question at both the political and expert level.

"It is very clearly in the interest of both the EU and Hungary to have these negotiations start as soon as possible," Mr Fellegi said. "It is in nobody’s interest not to have the negotiations," he added.

He said the start of the talks would give "the right signal to markets".

Mr Fellegi said there was a "significant overlap" between the future negotiations on the financial assistance and the EU’s procedures against Hungary.

Asked about preconditions for the talks, Mr Fellegi said there might be differences on whether some issues should be part of the negotiations or clarified beforehand.

"My impression is that everybody’s in favour of a solution," he said. "I don’t see any such issue that would block the start of the negotiations," he added.

Mr Fellegi said the Hungarian government had "the whole picture" after his two weeks of talks. He said it was in the position to form a final opinion and position on all of the points.

He added that issues could be cleared up at a meeting between Prime Minister Viktor Orban and EC President Jose Manuel Barroso in Brussels next Tuesday.

Asked about the form of the assistance package Hungary is seeking, Mr Fellegi said the country did not need access to financial assistance immediately, thus the main purpose would be to seek some sort of precautionary package.

Mr Fellegi acknowledged that the assistance could come in the form of a Stand-By Arrangement that comes with more conditions than other IMF credit constructions.

"We are fully aware of the fact that any package in any form...will come with a set of conditions and a set of principles about supervision and controls, because that’s the nature of providing financial assistance," he said. He added that the Hungarian government had never thought that financial assistance would come without any conditions.

Asked about the size of the package Hungary is seeking, Mr Fellegi said it had to "satisfy the market’s expectations" and could not "be bigger than necessary". He added that the government had ideas but said it was not the right time or the right place to reveal these.

Asked about the timing of the talks, Mr Fellegi said, "I don’t expect to have more difficult or even longer negotiations than normally."

Mr Fellegi said the talks in Germany and Vienna include the issue of how banks in Hungary could help businesses, supporting the government’s growth plan.