Economy
Hungary would need IMF safety net by 2013 - Varga
Vote delay comes in handy
The delay of lawmakers’ final vote on the amendments to the central bank law “gives the chance for further negotiations if it’s needed," Varga said in an interview during a World Economic Forum meeting in Istanbul on Wednesday.
“We are ready to sit down at the negotiating table immediately as soon as" the IMF and the European Union “decide when and under what conditions they want to begin the talks," he added.
Read more about how the postponement came about at the links below:“I would like to categorically refute" assumptions by some market participants that the government isn’t really seeking an agreement, Varga said.
“Hungary isn’t preparing for a negotiation that isn’t going to lead to an agreement. We would like a good agreement that’s beneficial for the country and reassures the IMF and the EU that Hungary is a reliable partner."
Economists including Timothy Ash of Royal Bank of Scotland
and Peter Attard Montalto of Nomura have said Hungary may be emulating a tactic used by Turkey, which discussed a possible IMF loan for more than a year and a half until the government announced in March 2010 that it no longer needed a backstop.
Hungary is delaying the talks by dragging its feet on changing the disputed central bank law, Citigroup said on 17 May after meeting the Washington-based lender’s officials in Budapest. Eszter Gárgyán, Citi’s Budapest-based analyst said in a research note yesterday
delaying the vote “may also have been a tactical move from the government to gauge the IMF’s resolve.".
Safety net needed for 2013
Financing is guaranteed this year and by 2013 Hungary would like to have a “a safety net" from the IMF, Varga said. Hungary may consider selling international bonds while negotiating the loan, he added.
With about EUR 35 billion of central bank foreign exchange reserves “financing of the country is secured," Varga said. “This year is guaranteed and by next year we would like to get to the point where Hungary has this safety net in place."
While Hungary always needs to be weighing its financing options, selling Eurobonds “would not be realistic at the moment," the chief negotiator added. “The market is also waiting for the start of the negotiations."
Once Hungary has started talks on the international bailout it will become “possible to consider" an international bond sale, should market sentiment regarding turmoil in the euro region improve, he said.
Consultations on c.bank law
The vote on the central bank law amendments will probably take place before Parliament goes into summer recess on 15 July, Antal Rogán, head of the ruling Fidesz party’s group of lawmakers, said on 4 June.
Varga said he met Hungarian central Bank President András Simor yesterday and is planning to meet Simor’s deputy, Ferenc Karvalits, in “the coming days" about Hungary’s negotiating position.
Remaining issues about the central bank law are “technical" and will be resolved in talks between the central bank, Hungary’s government, the ECB, the IMF and the European Commission, Varga said.
The delay of lawmakers’ final vote on the amendments to the central bank law “gives the chance for further negotiations if it’s needed," Varga said in an interview during a World Economic Forum meeting in Istanbul on Wednesday.
“We are ready to sit down at the negotiating table immediately as soon as" the IMF and the European Union “decide when and under what conditions they want to begin the talks," he added.
Read more about how the postponement came about at the links below:“I would like to categorically refute" assumptions by some market participants that the government isn’t really seeking an agreement, Varga said.
“Hungary isn’t preparing for a negotiation that isn’t going to lead to an agreement. We would like a good agreement that’s beneficial for the country and reassures the IMF and the EU that Hungary is a reliable partner."
Economists including Timothy Ash of Royal Bank of Scotland
and Peter Attard Montalto of Nomura have said Hungary may be emulating a tactic used by Turkey, which discussed a possible IMF loan for more than a year and a half until the government announced in March 2010 that it no longer needed a backstop.
Hungary is delaying the talks by dragging its feet on changing the disputed central bank law, Citigroup said on 17 May after meeting the Washington-based lender’s officials in Budapest. Eszter Gárgyán, Citi’s Budapest-based analyst said in a research note yesterday
delaying the vote “may also have been a tactical move from the government to gauge the IMF’s resolve.".
Safety net needed for 2013
Financing is guaranteed this year and by 2013 Hungary would like to have a “a safety net" from the IMF, Varga said. Hungary may consider selling international bonds while negotiating the loan, he added.
With about EUR 35 billion of central bank foreign exchange reserves “financing of the country is secured," Varga said. “This year is guaranteed and by next year we would like to get to the point where Hungary has this safety net in place."
While Hungary always needs to be weighing its financing options, selling Eurobonds “would not be realistic at the moment," the chief negotiator added. “The market is also waiting for the start of the negotiations."
Once Hungary has started talks on the international bailout it will become “possible to consider" an international bond sale, should market sentiment regarding turmoil in the euro region improve, he said.
Consultations on c.bank law
The vote on the central bank law amendments will probably take place before Parliament goes into summer recess on 15 July, Antal Rogán, head of the ruling Fidesz party’s group of lawmakers, said on 4 June.
Varga said he met Hungarian central Bank President András Simor yesterday and is planning to meet Simor’s deputy, Ferenc Karvalits, in “the coming days" about Hungary’s negotiating position.
Remaining issues about the central bank law are “technical" and will be resolved in talks between the central bank, Hungary’s government, the ECB, the IMF and the European Commission, Varga said.
