Hungary's mixed messages on relations with the International Monetary Fund have left analysts split down the middle on the chances of it returning at some stage to the Fund for aid, a Reuters poll showed on Wednesday.
The poll showed 7 of 15 analysts polled expected the new government to sign a new aid deal with the IMF after local elections in October, despite a government statement on Wednesday to the contrary after the surprise collapse of talks last month.
On Tuesday an economy ministry press official had said that Budapest would resume talks with the IMF in the autumn and "the sides will reach an agreement". "On the whole the communication has been confusing from the markets' perspective," said Eszter Gargyan at Citigroup.
"I think they don't want to have a new agreement with the Fund, and if there is no big market pressure there won't be an agreement," she added.
Markets have refrained from punishing the centre-right Fidesz government ahead of the elections, hoping it would reverse its opposition to a new deal, which would lower funding costs and be seen as a guarantee of fiscal probity from the new administration.
Hungarian assets and the forint have recovered from falls in July after the IMF talks collapsed, but a bout of renewed forint weakness this week highlighted that Hungary's markets remain vulnerable to shifts in investor sentiment.
A majority of analysts also said the European Union was unlikely to allow Fidesz - seeking fiscal leeway to boost an ailing economy - to run a budget deficit of more than the bloc's 3 percent of GDP ceiling next year.
The poll was conducted on August 18-25 with 18 domestic and foreign participants, including political analysts, and also showed that 13 of 17 analysts expect the government to lay out a credible medium-term fiscal and economic programme after October 3 municipal elections.
"If you don't have the IMF and if you're trying to convince the EU you have to have a credible national programme to convince stakeholders. The question is whether markets will accept the plan," said Kubilay Ozturk at HSBC in London.
Analysts were also deeply divided over the issue of whether Hungary could afford not to have an IMF deal for next year and finance itself fully from the market.
Nine of 18 analysts said this would be feasible - with four of them saying this was conditional upon benign global market conditions while 8 said no. One said it would depend on markets.
"Ditching IMF support is essentially a gamble by the Hungarian government built on the perspective of a relatively solid recovery. Risks are very high that the gamble fails," said Ralf Wiegert at IHS Global Insight.
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