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Hungary „Still Obtains Funding from the Financial Market“

Published: September 26, 2012; 19:46 · (Vindobona)

Vince Szalay-Bobrovniczky, the Hungarian ambassador in Vienna, emphasized that Hungary is not dependent on the IMF loan. The IMF urges Hungary to reduce its bureaucracy, he says.

Hungary „Still Obtains Funding from the Financial Market“ / Picture: © Vindobona.org

Although Hungary still has access to the financial markets. At the moment, Hungary´s interest rate on sovereign debt comes at 7.6%. In April, the rate stood at 10.6%. However, an IMF loan would be desirable, Szalay-Bobrovniczky says. The negotiations should be concluded in November 2012, he says. The size of the loan should reach € 15bn to € 20bn.

The preconditions are not known yet. The ambassador explains that IMF calls for a reduction of bureaucracy and a modernization of the industrial sector. Wage cuts would not be conceivable. The average income comes at € 600 and the average pension only reaches € 300. However, social cuts would be possible, Szalay-Bobrovniczky argues.

Analysts say that there is still a number of controversial issues. IMF would be concerned about the high public and external indebtedness. Besides that, IMF referred to the „strained bank balance sheets“ and the „weak confidence and elevated risk perceptions“.

In the last months, the negotiations were postponed several times, which was duo the Hungary´s National Bank Act. IMF and the EU criticized that the National Bank´s independence would be endangered. Hungary has submitted its proposals to consolidate public finance, the Ambassador says. Now, Hungary would wait for the EU and IMF, Szalay-Bobrovniczky adds.