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Response to letters on central bank act amendments could arrive this week

Hungary could get replies to letters it sent the European Union, the International Monetary Fund and the European Central Bank on amendments to the central bank act yet this week, Mihály Varga, Hungary's chief negotiator for financial assistance from the IMF and EU, said on public television late Thursday.

The IMF, ECB and European Commission confirmed on Thursday that the letters had been received.

Changes to Hungary's central bank act have been a contentious point in preparations for negotiations on the precautionary financial assistance Hungary is seeking from the IMF and EU.

Varga said on m1's program Az Este that Parliament could approve the amendments to the central bank act, submitted on Monday, by the end of the month. No further obstacles to the start of negotiations are apparent, but this will naturally depend on consultations between the IMF and the EU, he added.

Based on the experience of negotiations in 2010, conditions could affect public transport financing, the system of local government or the tax system, Varga said.

Varga declined to answer when asked if there were any conditions that the government would not accept, but he did say that the government would not deviate from the main points of its economic policy: reducing the deficit and state debt, and increasing employment.

Asked what the government would do if a return to a progressive tax system was made a condition of the financial assistance, Varga said the government would explain to its negotiating partners that the flat-rate tax system will only be fully in place from 2013, thus it may be worthwhile to wait and see how it works.