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Hungary needs IMF backing but not funds, Bajnai says

Hungary still needs the support of the International Monetary Fund, but it will not draw down any further money from its IMF standby credit, Prime Minister Gordon Bajnai said in Washington on Wednesday.

As part of a four-day work visit to Washington, Bajnai held discussions with IMF CEO Dominique Strauss-Kahn. At a joint press conference following the talks, Bajnai pointed out that Hungary's has stabilized its position, interest rates have fallen, the forint has strengthened and the company is again able to finance itself without assistance from the IMF.

All this proves that the country is following the right policy. “We have put the unutilised (IMF) loans into reserves, and they will be available until next October, to the next government as well”, he said.

He said the IMF last year threw a life buoy to the drowning Hungarian economy. “Now we are not using the IMF loan as a life buoy, but rather as a mountaineering rope which is there as security in case a slip for any reason”.

He also said that the 2010 budget, which targets the deficit as 3.8% of the GDP, shows that Hungary “has returned to the policies of common sense”.

Answering the question whether he is concerned by the possibility of Hungary giving up its current economic program after next year's elections, Dominique Strauss-Kahn jokingly replied that the IMF deals with economic forecasts, not political ones. Mr Strauss-Kahn said that what has happened up to this point was good, and added that “I believe that any government taking office after the elections will follow a policy very similar to the previous one”.

Behind the political statements, everyone clearly understands that there is no other way to rescue the economy, the IMF CEO said, referring to his recent meetings in Budapest with representatives of the opposition.

The IMF CEO said he believes the Hungarian government's moves so far will have a long-term impact. “From the point of view of the IMF, what has happened is exactly what was necessary (...) and the effects will be lasting”, he said. At the same time he warned that the crisis is not over yet. (MTI-Econews)