Economy
No official talks between IMF and Hungary's Fidesz - IMF Res.Rep.
IMF met Fidesz officials for "an informal exchange of views", Ivaschenko told Reuters in a brief interview.
"We discussed our views on the economy, and also the IMF presented the global outlook," she added.
The Fidesz representatives said that, if elected, their intention would be to reduce the fiscal deficit over time, she added.
"The fiscal deficit target for 2010 is still 3.8% (of GDP)," she said.
Comments by analysts at Eurasia Group last week spurred strong interest in the market. According to Eurasia, the opposition Fidesz party has held preliminary discussions with the IMF, and indications were given that the Fund might be willing to cut the government some slack over the current target to run a 3.8% of GDP budget deficit for 2010.Mihály Varga, Hungary’s former Finance Minister and a top economic advisor in Fidesz, told public television late on Sunday that he had no clearance to discuss his party’s discussions with the IMF about a possible overshoot of the 2010 deficit target.
He said, however, that their latest talk went on for two hours and they have addressed "a lot of economic aspects".
"We have agreed that everyone will wait until after the elections," he said.“The IMF may have responded to ongoing speculation about negotiations between IMF and Fidesz. Furthermore, we think that the commenting on Fidesz's desire to reduce the deficit over time (we think it means after a temporary larger deficit in 2010 and perhaps 2011) and not excluding the modification of the fiscal conditions of the credit agreement paves the way for a future compromise. Hence we think that this note underpins our forecast of a larger budget deficit than the original target of 3.8% (our forecast is 5.7%)," commented János Samu, analyst at Concorde Securities in Budapest.
“Fidesz intends to have higher deficit than the original target due to its intention to support the fragile economy and assume debt of loss making SOE's (. While we agree with the IMF's assessment of Fidesz returning to conservative fiscal policy over time, we think the detour from the deficit reduction path already modified a year ago carries the risks that markets may at times of scare interpret it badly and could potentially have an impact on yields," Samu added.
He does not think, however, that “the outlook for fiscal sustainability is going to fundamentally change with the entry of the new government, hence we think that the trend of 10y yields could be towards 6.5% by the end of the year."
"We discussed our views on the economy, and also the IMF presented the global outlook," she added.
The Fidesz representatives said that, if elected, their intention would be to reduce the fiscal deficit over time, she added.
"The fiscal deficit target for 2010 is still 3.8% (of GDP)," she said.
Comments by analysts at Eurasia Group last week spurred strong interest in the market. According to Eurasia, the opposition Fidesz party has held preliminary discussions with the IMF, and indications were given that the Fund might be willing to cut the government some slack over the current target to run a 3.8% of GDP budget deficit for 2010.Mihály Varga, Hungary’s former Finance Minister and a top economic advisor in Fidesz, told public television late on Sunday that he had no clearance to discuss his party’s discussions with the IMF about a possible overshoot of the 2010 deficit target.
He said, however, that their latest talk went on for two hours and they have addressed "a lot of economic aspects".
"We have agreed that everyone will wait until after the elections," he said.“The IMF may have responded to ongoing speculation about negotiations between IMF and Fidesz. Furthermore, we think that the commenting on Fidesz's desire to reduce the deficit over time (we think it means after a temporary larger deficit in 2010 and perhaps 2011) and not excluding the modification of the fiscal conditions of the credit agreement paves the way for a future compromise. Hence we think that this note underpins our forecast of a larger budget deficit than the original target of 3.8% (our forecast is 5.7%)," commented János Samu, analyst at Concorde Securities in Budapest.
“Fidesz intends to have higher deficit than the original target due to its intention to support the fragile economy and assume debt of loss making SOE's (. While we agree with the IMF's assessment of Fidesz returning to conservative fiscal policy over time, we think the detour from the deficit reduction path already modified a year ago carries the risks that markets may at times of scare interpret it badly and could potentially have an impact on yields," Samu added.
He does not think, however, that “the outlook for fiscal sustainability is going to fundamentally change with the entry of the new government, hence we think that the trend of 10y yields could be towards 6.5% by the end of the year."
