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IMF: List of Demands against Hungary Became Public

Published: September 7, 2012; 07:34 · (Vindobona)

The list contains demands of the IMF against Hungary and is the precondition for the safety loan of € 20bn. However, the list could be a counterfeit.

IMF: List of Demands against Hungary Became Public / Picture: © Vindobona.org

This week, the Hungarian newspaper “Magyar Nemzet” has published a list of demands against the Hungarian government. As Hungary applied for a safety loan at IMF, further cuts in public expenditures are expected. Hungary aims to reach a loan ranging from € 15bn to € 20bn.

According to this list, IMF expects “structural improvements with a size of 2.0% of GDP”. Above all, pensions and child benefits should be reduced, the retirement age should be lifted and the income tax should increase. At the moment, Hungary has a flat tax of 16%. Moreover, a property tax should be introduced. In addition, the bank tax should be abolished. Public administration costs and subsidies should be cut. Furthermore, the government is asked to promote privatizations.Neither the Hungarian government nor IMF commented the correctness of this list.

Orban underlined that Hungary aims to maintain the access to the capital market. The loan should help Hungary to reach lower interest rates on new sovereings bonds. At the moment, Hungary´s interest rate comes at seven percent. In January, the interest rate almost reached ten percent.

Nevertheless, observers think that the negotiations between IMF and the Hungarian government will not be finished before 2013. It is not unlikely that the negotiations will fail again. Already in December 2010, the negotiations were broken up.