Hungarian Prime Minister Viktor Orban on Thursday rejected conditions set by the European Union and International Monetary Fund for a stand-by credit line of 15 billion euros ($19 billion). "At this price ... and in this way, no," the right-wing Orban said on his page on the social networking website Facebook. Hungary is a member of the 27-nation EU but not of the 17-country eurozone.
Talks however would continue, Orban added, saying that the government had been "mandated to come up with a new proposition for talks with the IMF and EU in the coming days." According to the Magyar Nemzet daily, seen as close to the government, the IMF and EU's conditions include cutting taxes and benefits for families, introducing a property tax, cutting transport subsidies and annulling a bank levy.
Hungary's currency the forint fell sharply following the announcement on Thursday, touching 289 forints against the euro compared to around 285 forints before, before recovering to around 286 forints. During the 2008-2009 financial crisis, Hungary narrowly escaped bankruptcy thanks to a 20-billion-euro credit line from the IMF, the EU and the World Bank but Orban tore up the agreement when he came to power in 2010 for a second time.
But Orban then approached the IMF and the EU for help last year after the forint fell sharply and the government's borrowing costs on financial markets soared just as the economy weakened. Investors were spooked by a number of unorthodox economic policies such as the forced nationalisation of state pension assets, "crisis taxes" on certain sectors and a scheme to help mortgage-holders that left banks with a large bill.
A new constitution also drew fire from the EU, US Secretary of State Hillary Clinton and Amnesty International, amongst others, for removing vital checks and balances on government power, they said. Brussels also threatened legal action. The government has since tweaked the legislation, allowing a visit in July by a delegation of the EU and the IMF described at the time by Orban as "encouraging", and for talks to resume the same month. Hungary's economy fell into recession in the second quarter, contracting by 0.2 percent, according to a preliminary estimate by the statistics office in August. Unemployment is above 10 percent and inflation nearing six percent.
Comments
Comments are closed.