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Hungary can change contested law even after IMF talks start

Hungary's government has already amended provisions in the Central Bank Law to which the European Central Bank objected, and if international lenders require any further changes in the course of negotiations, parliament can make them later, Mihály Varga, head of the prime minister's office, told commercial television channel ATV late on Sunday.

Varga said the precautionary agreement that Hungary's government is seeking with the International Monetary Fund and the European Union was its top priority. 

Varga added that the EU is expected to approve Hungary's updated euro convergence plan, which contains both spending cuts and revenue hikes.

On the subject of changes to the Central Bank Act, Varga said the submission of proposals did not mean that they are the final version to be approved by parliament. Three main contentious issues remain; on all other points the government has yielded, Varga said. The ECB and the EU objected to the oath taken by the central bank president as well as the reduction of his remuneration and changes to the Monetary Council's scope of authority, he said. The latter was voted for unanimously by the Council itself, Varga noted. He added that the president's oath was only a problem for the ECB, not the EU, so this should not hinder talks.

Asked about a planned meeting between prime minister Viktor Orbán and European Commission President Jose Manuel Barroso, Varga said the talks would obviously focus on issues connected to the IMF/EU agreement. He said the euro convergence plan should be acceptable to the EU and that the debate was over a few percentage points of budget deficit, namely whether the it would fall below 3 percent of gross domestic product (GDP) this year and next or will still be above -- at 3.05% and 3.26% respectively as the commission projects -- while Spain has a budget deficit of over 5%, he said.

Varga said however that he expected the Orbán-Barroso meeting would succeed in proving that the government's measures would push the deficit to below 3% and the excessive deficit procedures ongoing since 2004 against the country may be withdrawn.

Speaking in a television interview, Hungarian Foreign Minister János Martonyi said "we expect ... as this is what we are hearing from the commission, that the decision about ... the start of the talks with the European Commission and the International Monetary Fund will be made by the end of April," Reuters reported at the weekend.