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Hungary still awaits IMF's reply

National Economy Ministry State Secretary Gyula Pleschinger, a member of Hungary's delegation for talks on a precautionary financial-assistance package with the International Monetary Fund and the European Union, said that "the ball is not in our court."

He hoped that "if we settle the central bank issue ..we could begin dialogue in just a couple of weeks. The main point is that the ball is not presently in our court and we hope that the Commission will make a decision quickly," Pleschinger said in an interview with the online business website published on Monday. 

Pleschinger said that the government had already sent the European Commission detailed information regarding the three issues over which the EC launched accelerated infringement-proceedings in January--the new Central Bank Act, the mandatory retirement age for judges and data protection. 

"I hope that in the end the Commission connects the beginning of talks to the central bank issue only and leaves the other two issues to take their own course, because those are not really related to the macroeconomic situation or financing capability. At the same time we are, of course, prepared to discuss these issues all the way through." 

The state secretary stated that "I must emphatically stress that there will be an agreement." 

"Considering we called somewhat less than €12.5 billion from the previous [2008] credit line, I think that between €10 billion-15 billion would be enough.", the state secretary said when asked about the size of credit line agreement. "Though this is my personal opinion", he added, saying there was no word about the sum at talks with the Commission or the IMF.

Pleschinger conceded Hungary has forint- and foreign-currency expirations, but said that it has the resources for these. "Therefore we are not particularly pressed for time." 

Still the agreement could help to lower Hungarian government yields by 1%-1.5%, he estimated, noting the resulting savings in interest expenditure. 

The fact that foreign investors' holdings of Hungarian government securities has reached new peaks reflects confidence for Hungary, he said. At the same time, the high foreign ratio in financing is a risk.

Pleschinger said he would personally would like to see the share of Hungarian retail investors in government financing to return to 8-10% from the present 2-3%. This share would not increase financing costs any significantly while it would already have a stabilizing effect, he said. 

The delegation for the talks with the IMF and the EU is led by Minister without Portfolio Tamás Fellegi, and also includes National Bank of Hungary Deputy Governor Ferenc Karvalits.