Economy
Fellegi: Hungary on the "right track" to avoid default, IMF says no date for aid talks
Hungary’s top negotiator, Tamás Fellegi, travelled to Washington this week, for the third time in about as many months, as his government is trying to secure a credit facility (of EUR 15-20 bn) with the Fund.
IMF spokesman Gerry Rice would not disclose any details of the informal negotiations between the minister without portfolio and the IMF’s mission chief to Hungary (Christoph Rosenberg), but said the Fund still has not set any dates for a possible start of negotiations for a loan programme."Before we do that, we have to see signs of tangible steps that show the authorities' strong commitment to engage on all the policy issues relevant to macroeconomic stability," Rice said. But he would not elaborate on what specific steps the IMF wants Budapest to take.Talks about central bank independence
In the near future a five-party expert-level ad hoc working group - Hungarian authorities, the IMF, the European Commission, the European Central Bank (ECB) and Hungary’s central bank (NBH) - will hold talks about the issues around the Central Bank Act in order to resolve this party of the preconditions Hungary needs to meet to start formal aid negotiations, Fellegi told Hungarian newswire MTI on Thursday.
“We can solve the economic governance issues to this effect," Bloomberg cited Fellegi as saying.
This group is meant to “make sure we can harmonize all those preconditions concerning central bank independence as requested by our partners," Fellegi added. He said he discussed the formation of the group when he met with ECB President Mario Draghi in January.
Fellegi emphasised that the objective of the discussions with the Fund remain to start formal talks as soon as possible.
“I believe that from our part there is no major obstacle to starting the negotiations. And the Hungarian government is ready to and can fulfil the conditions which the IMF want to be met as preconditions," he added.
Formal aid talks can start only after the aforementioned work group decided on a package of measures that would ensure the Hungarian central bank’s independence in a way that is reassuring for everyone, Fellegi said. He reiterated that his visit to Washington did not aim to set a date for the official talks.
He reminded that the cabinet sent its response to the European Commission’s concerns about Hungarian legislation (infringement proceedings) last Friday, a week before the deadline. Budapest is now awaiting the assessment of these responses from the Commission and the ECB.
The EU on 2 April said it will assess as fast as possible Hungary’s response to its concerns.On 7 March, the EU executive took a formal step toward seeking a court order to require Hungary to redraft laws on the judiciary and data protection agency and asked for more information on planned changes to the new Central Bank Act. The commission gave Hungary one month to reply.
Fellegi reminded that Hungary needs to get the green-light to start formal talks from the Commission, the IMF and the ECB. “If that happens before the spring session (of the World Bank), which will be on April 21-22 in Washington, we can start talks here in Washington. If not, not."
Hungary is stable enough to avoid default
Fellegi told Bloomberg yesterday that Hungary is on the “right track" to resolve the crisis and can avert a default.
Default is not an option “because the financial situation is stable enough," Fellegi said.
“The political intention is very clear that" there is no default. The country “never did default in our history. Hungary is not in the situation to be bailed out," added.
After meeting with IMF officials on Wednesday, Fellegi said the “takeaway message clearly is that there is the mutual willingness to come to the negotiating table if the preconditions are met."
IMF spokesman Gerry Rice would not disclose any details of the informal negotiations between the minister without portfolio and the IMF’s mission chief to Hungary (Christoph Rosenberg), but said the Fund still has not set any dates for a possible start of negotiations for a loan programme."Before we do that, we have to see signs of tangible steps that show the authorities' strong commitment to engage on all the policy issues relevant to macroeconomic stability," Rice said. But he would not elaborate on what specific steps the IMF wants Budapest to take.Talks about central bank independence
In the near future a five-party expert-level ad hoc working group - Hungarian authorities, the IMF, the European Commission, the European Central Bank (ECB) and Hungary’s central bank (NBH) - will hold talks about the issues around the Central Bank Act in order to resolve this party of the preconditions Hungary needs to meet to start formal aid negotiations, Fellegi told Hungarian newswire MTI on Thursday.
“We can solve the economic governance issues to this effect," Bloomberg cited Fellegi as saying.
This group is meant to “make sure we can harmonize all those preconditions concerning central bank independence as requested by our partners," Fellegi added. He said he discussed the formation of the group when he met with ECB President Mario Draghi in January.
Fellegi emphasised that the objective of the discussions with the Fund remain to start formal talks as soon as possible.
“I believe that from our part there is no major obstacle to starting the negotiations. And the Hungarian government is ready to and can fulfil the conditions which the IMF want to be met as preconditions," he added.
Formal aid talks can start only after the aforementioned work group decided on a package of measures that would ensure the Hungarian central bank’s independence in a way that is reassuring for everyone, Fellegi said. He reiterated that his visit to Washington did not aim to set a date for the official talks.
He reminded that the cabinet sent its response to the European Commission’s concerns about Hungarian legislation (infringement proceedings) last Friday, a week before the deadline. Budapest is now awaiting the assessment of these responses from the Commission and the ECB.
The EU on 2 April said it will assess as fast as possible Hungary’s response to its concerns.On 7 March, the EU executive took a formal step toward seeking a court order to require Hungary to redraft laws on the judiciary and data protection agency and asked for more information on planned changes to the new Central Bank Act. The commission gave Hungary one month to reply.
Fellegi reminded that Hungary needs to get the green-light to start formal talks from the Commission, the IMF and the ECB. “If that happens before the spring session (of the World Bank), which will be on April 21-22 in Washington, we can start talks here in Washington. If not, not."
Hungary is stable enough to avoid default
Fellegi told Bloomberg yesterday that Hungary is on the “right track" to resolve the crisis and can avert a default.
Default is not an option “because the financial situation is stable enough," Fellegi said.
“The political intention is very clear that" there is no default. The country “never did default in our history. Hungary is not in the situation to be bailed out," added.
After meeting with IMF officials on Wednesday, Fellegi said the “takeaway message clearly is that there is the mutual willingness to come to the negotiating table if the preconditions are met."
