Govt ready to compromise on rate-setter, deputy governor issues

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Hungary's government appears prepared to accept the European Central Bank's criticism of paragraphs in the central bank act that allow an expansion of the National Bank of Hungary's rate-setting Monetary Council and the appointment of a third deputy governor, daily Népszabadság said on Wednesday, citing sources in the government and in governing party Fidesz who wished to remain unnamed. The cabinet is prepared to accept the ECB's criticism of the points even though the matters were not mentioned in the European Commission's infringement procedure concerning the independence of the MNB, the paper said. Proposals on amendments to the central bank act are under preparation, it added. Compromising on the matter of the number of rate-setters will not result in any big loss of prestige for the government as most of the decisions taken by the Monetary Council recently have been supported by a big majority, the paper noted. The government calculates that negotiations on financial assistance from the International Monetary Fund and the European Union can start in the summer, after a meeting of EU finance ministers on June 22, the paper said. A "photo opportunity" with the IMF delegation, would send an important message to markets, even if the negotiations do not start in earnest until the autumn, it added.

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