Hungary Accedes to IMF Concerns on Bank Laws

by
January 19, 2012

By VERONIKA GULYAS

VIENNA—Hungary aims to secure an agreement with the European Union and the International Monetary Fund on a loan package by the end of the first quarter, an Economic Ministry official said in an interview Wednesday.

Hungary’s negotiating team with the EU and the IMF is in informal talks this week with European political leaders after visiting the IMF in Washington last week. These talks are aimed at preparing official negotiations for a credit line with the international bodies.

Zoltan Csefalvay, a state secretary at the ministry, said that the government will make changes that the EU demanded Monday in several Hungarian bills, including the central bank law, which has been criticized by the European Central Bank for threatening the Central Bank’s independence.

Mr. Csefalvay noted that the government can finally amend its legislation as the criticism this time includes specific points.

As for the timing of the changes in the challenged legislation, Mr. Csefalvay said “talks will now start on the basis of the EU’s list,” adding that the government needs to act promptly to avoid letting the legal case reach the European court. The European Commission Tuesday opened three legal cases against the Hungarian government, aiming to undo laws that the commission says threaten the independence of key government agencies.

Mr. Csefalvay said that the two most important points regarding the central bank law are the maximum number of the rate-setting Monetary Policy Council members, which has been raised to nine from seven, and the maximum number of deputy governors, which has been raised to three from two.

In these two issues “the government will make its remarks and an agreement can be made,” he said.

The Hungarian government, in place since mid-2010, has been criticized for some of its new legislation, including the central bank law, the media law and the country’s new constitution.

Critics have said that the legislation approved by parliament, in which the governing Fidesz party holds a two-thirds majority, has eliminated the system of checks and balances or goes against EU norms.

Mr. Csefalvay dismissed some of the EU requests as politically motivated.

He stressed, however, that the Hungarian cabinet is ready to make the necessary amendments so that legislation won’t infringe the EU Treaty.

To read more, visit: http://online.wsj.com/article/SB10001424052970204468004577169083514452216.html

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