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Orbán: Hungary will make credit deal with IMF/EU

Prime Minister Viktor Orbán on Friday said Hungary will make a credit deal with the International Monetary Fund and the European Union, but not under the conditions made public on Thursday.

Orbán told public radio station Kossuth Radio that the cabinet will draw up an alternative position for the IMF/EU talks in the next 7-10 days.

Magyar Nemzet said in its Thursday issue that the conditions for the precautionary financial assistance Hungary wants include a reduction in pension payments, an increase in the pension age, lower family subsidies, a rise of the personal income tax, privatization, a cut in travel preferences, less bureaucracy, the introduction of a universal value-based property tax, a reduction in local government spending, the elimination of the bank levy and financial support for the banking sector.

Later in the day, Prime Minister Viktor Orbán said Hungary did not need a financial guarantee from the IMF and EU "at such a price", referring to the conditions in the report. Orbán confirmed some of the conditions in a video message on his Facebook page, such as a reduction in pensions, a cut in bureaucracy and the elimination of the bank levy as well as monies for banks.

Orbán told Kossuth Rádió that the EU had discussed the situation of Hungary on Thursday. The EU members of the IMF/EU negotiating delegation presented a report to the EU's finance and economy committee on the talks with Hungary, he said.

The report acknowledges that Hungary needs a precautionary agreement rather than money, he added.

Orbán said Hungarians cannot accept the conditions of the IMF/EU other than one to reduce bureaucracy.

"Naturally, we understand that it is good for a country to have a small fiscal deficit, but it is not all the same that we touch pensions, take away travel discounts from pensioners or eliminate family subsidies. We do not need an agreement with the IMF at such a price," he said.

He stressed, however, that an agreement with the IMF/EU is necessary and will be reached, but not on such a basis.

Orbán noted that his government had reduced Hungary's state debt, at an unchanged exchange rate in forints, to 77% of GDP and assisted hundreds of thousands of borrowers with foreign currency-denominated loans. He added that the position of indebted businesses had not changed enough.

He said job creation was going well and the government's public work program was "progressing with extraordinary success".

He called the government's workplace protection plan the most important task in autumn and said it must not be held back even "even if, for example, the IMF and the EU ask something of us that would make the implementation of the workplace protection plan impossible".

Asked if the HUF 250 billion-300 billion necessary for the plan would materialize, Orbán said the question was at the center of the debate with the IMF/EU delegation because the international bodies think Hungary's budget balance will be fine without the plan. The government, on the other hand, sees the necessary coverage there in the budget.

"An agreement has to be reached between two positions far away from each other. This is possible...we are progressing well," he said.

Orbán said an announcement by European Central Bank president Mario Draghi on Thursday that the ECB would buy government bonds to ease the sovereign debt crisis marked a breakthrough that would affect central banks outside of the eurozone too. No longer are central banks seen only as protectors of the value of currency, he added.

Orbán will speak about the most important tasks facing Parliament before the start of the autumn session on Monday.