Economy
Why IMF left Hungary - details leaked (2)
"The untimely departure of staff cannot have surprised the government; in fact it may have actually been expected," the news portal claimed, citing its own sources. Brussels hosted a conference in late November in which EU member states discussed and finalized their stance on talks with Hungary. In line with these, EU staff expected the government to commit to rigorously meeting deficit targets, sustainable debt reduction, guarantees for of central bank independence, and imposing controls on public spending. Meanwhile the IMF has also taken a stance to prepare a Stand-by Arrangement (SBA) for Hungary.
Therefore, the submission of the new central bank bill to Parliament took the delegation by surprise, Origo.hu pointed out. Further, the IMF and EU staff found fault with the Financial Stability Act as well. "In the delegation's view, putting in place measures focusing on short-term debt reduction with a 12-month time horizon is in conflict with EU recommendations; the Fiscal Policy Council is a mere "puppet" in the government's hands, transparency of public funds management is poor, and has not been improving," the article noted. The Hungarian delegation informed Prime Minister Viktor Orbán of these on Thursday evening, according to Origo.hu.
The news portal has also reminded that the situation had somewhat improved by Friday afternoon when Fidesz MP Antal Rogán, who chairs Parliament's Economic Committee, submitted two proposed modifications to the Central Bank Act draft, and the debate in Parliament was not concluded. Meanwhile, on Monday it has been made clear that further amendments are to follow.EU ultimatum: 3 issues
In the information of Hvg.hu, Hungary's Prime Minister Viktor Orbán received an ultimatum discussing three issues from the EU delegation. The points on the agenda included revoking plans to enact a "tax constitution" requiring two-third majority for changes to the flat-rate tax regime. Further, the document stipulated that Hungary should not be approved for an IMF facility that does not require regular reviews.
According to the report, the European Commission was deliberately intended to demand the impossible of the premier in an attempt to force Orbán to resign. The government has been under tremendous international pressure to change its social and economic policies that have unduly hurt the interests of many. Canceling informal talks with the IMF and the European Commission and the untimely departure of the delegation from Budapest was part of this," a Fidesz source who wished to remain anonymous told HVG. The latter has also reported that talks were actually disrupted as soon as Thursday afternoon when the PM declared he was not going to accept these conditions. The EU was more adamant on these points, while the IMF was ready to make concessions.
The source claimed the key issue in the new Central Bank Act debate was "whether in an extraordinary situation it is possible to deviate from the dogmatic monetary policy that has become the norm in recent years, whether the central bank can assist government strategy." The Prime Minister is intriuged by an earlier proposal by former NBH Governor György Surányi who suggested that of the EUR 35 billion foreign currency reserve of the central bank, EUR 4 billion to EUR 5 billion could be used to create HUF resources to jump-start lending. Orbán believes "the country does not need such a high FX reserve anyway."
According to the portal, the premier is dissatisfied with the current government structure, which will come under review soon and this will entail more than staff changes.
Therefore, the submission of the new central bank bill to Parliament took the delegation by surprise, Origo.hu pointed out. Further, the IMF and EU staff found fault with the Financial Stability Act as well. "In the delegation's view, putting in place measures focusing on short-term debt reduction with a 12-month time horizon is in conflict with EU recommendations; the Fiscal Policy Council is a mere "puppet" in the government's hands, transparency of public funds management is poor, and has not been improving," the article noted. The Hungarian delegation informed Prime Minister Viktor Orbán of these on Thursday evening, according to Origo.hu.
The news portal has also reminded that the situation had somewhat improved by Friday afternoon when Fidesz MP Antal Rogán, who chairs Parliament's Economic Committee, submitted two proposed modifications to the Central Bank Act draft, and the debate in Parliament was not concluded. Meanwhile, on Monday it has been made clear that further amendments are to follow.EU ultimatum: 3 issues
In the information of Hvg.hu, Hungary's Prime Minister Viktor Orbán received an ultimatum discussing three issues from the EU delegation. The points on the agenda included revoking plans to enact a "tax constitution" requiring two-third majority for changes to the flat-rate tax regime. Further, the document stipulated that Hungary should not be approved for an IMF facility that does not require regular reviews.
According to the report, the European Commission was deliberately intended to demand the impossible of the premier in an attempt to force Orbán to resign. The government has been under tremendous international pressure to change its social and economic policies that have unduly hurt the interests of many. Canceling informal talks with the IMF and the European Commission and the untimely departure of the delegation from Budapest was part of this," a Fidesz source who wished to remain anonymous told HVG. The latter has also reported that talks were actually disrupted as soon as Thursday afternoon when the PM declared he was not going to accept these conditions. The EU was more adamant on these points, while the IMF was ready to make concessions.
The source claimed the key issue in the new Central Bank Act debate was "whether in an extraordinary situation it is possible to deviate from the dogmatic monetary policy that has become the norm in recent years, whether the central bank can assist government strategy." The Prime Minister is intriuged by an earlier proposal by former NBH Governor György Surányi who suggested that of the EUR 35 billion foreign currency reserve of the central bank, EUR 4 billion to EUR 5 billion could be used to create HUF resources to jump-start lending. Orbán believes "the country does not need such a high FX reserve anyway."
According to the portal, the premier is dissatisfied with the current government structure, which will come under review soon and this will entail more than staff changes.
