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Varga sees possible new developments in IMF/EU negotiations in Dec

New developments in the current phase of negotiations on a financial backstop from the International Monetary Fund and the European Union could arise in December, after the 2013 budget is approved, Mihály Varga, Hungary's chief negotiator with the IMF/EU, said on public radio on Tuesday.

The IMF/EU will wait until Parliament approves the 2013 budget, Varga said on Kossuth Radio's 180 perc program.

Parliament is expected to vote on the 2013 budget by December 10 at the latest, MTI learnt.

He said it was unlikely that Hungary would reach an agreement with the IMF/EU this year. "How the situation turns out" in 2013 depends not only on economic policy measures taken by the Hungarian government but on decisions taken in the eurozone, he added.

Varga said negotiations with the IMF/EU had never been broken off, adding that the negotiations could take many forms as the Hungarian and IMF/EU delegations communicate in person or on the telephone. He said he had met with the head of the IMF delegation in person last week.

"The government is drawing up next year's budget and we are obviously curious about the expectations of our partners and about what concrete measures they will recommend....We will say how we see things, what economic policy decisions are necessary," he said.

He said reaching an agreement with the IMF/EU had not become a redundancy, noting that Prime Minister Viktor Orbán had reiterated Hungary's intention to reach such a deal in an interview with the radio on Friday.

There has been progress, and the country's financial position has improved visibly too, he said. The IMF and EU acknowledge this, he added.

"There is a problem, or could be a problem, with the composition of growth, because when they say, is growth sustainable or what is the quality of a measure, they are really talking about the debate over this," he said. He added that it was "no secret since July" that the question of keeping or eliminating the bank levy was a matter of debate between the government and the IMF/EU.

Varga said the EU had basically forced Hungary to take steps of which the IMF would have otherwise disapproved.

If the EU says we have to keep the deficit under 3% at any cost, composition of growth could obviously suffer, he said, adding that the EU and IMF were at odds on this matter.