Hungary could reach agreement with IMF/EU by end of autumn

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Hungary could reach a credit agreement with the International Monetary Fund and the European Union at the end of autumn, Mihály Varga, the country's chief negotiator on the matter, said on public radio on Thursday.

A joint IMF/EU delegation wound up a one-week visit to Hungary on Wednesday. Varga told MR1-Kossuth Rádió that both sides had completed a useful assessment of the situation in the first round of negotiations. He added that the soundness of macroeconomic projections for next year, the proportion of public sector workers among the employed overall and the extension of a duty on financial transactions to the central bank were among the topics under debate by the parties.

The sides agreed that the soundness of macroeconomic projections and fiscal targets for next year must be reinforced, he said, while conceding that there was a difference of opinions regarding the instruments that can be used to achieve these targets.

He said the IMF/EU delegation believed Hungary's public sector accounts for too big a part of the total number of those employed. He acknowledged that an increase in the number of private sector workers should be supported, but added that further layoffs in the public sector posed not just an economic question but a social one.

Touching on the dispute over the financial transactions duty, Varga reiterated the stand voiced by Prime Minister Viktor Orbán on Wednesday: the financial sector must share its own part of the burden of eliminating accrued debt.

He said the IMF/EU delegation shared the view of the European Central Bank on the matter of the duty, adding that the break in the negotiations would give the government time to assess this stand.

The ECB on Tuesday said the duty, which must be paid by the central bank and the treasury, impairs the MNB’s functional and institutional independence.

"If necessary, we will obviously return to this question," Varga said.

Orbán said on Wednesday that the IMF/EU delegation would return to Hungary in September.

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