Tamás Fellegi (Minister without Porfolio for Liaising with Certain International Financial Organisatons) today confirmed that the Hungarian Government continued to make efforts towards the earliest possible commencement and closing of negotiations with the IMF and the EU.

He outlined that Hungary is ready to accept any conditions, which supports its long-term economic and social stability, improvement of its competitiveness, the permanent restoration of market and investor confidence in the country, and the Government’s efforts at setting the Hungarian economy to a permanent growth trajectory - so long as they did not infringe upon the country’s sovereignty.

In his address entitled “Before IMF, After IMF” Minister Fellegi highlighted that expert consultations had been regularly held with the representatives of the European Commission (EC) and the IMF since January relating to the content of the Country Report and the expected macro-economic data in the interest of starting the official negotiations with the IMF and the EU to provide financial support as a safety net for Hungary. He expressed his hope that the results achieved in the infringement proceedings and the consultations to be held with the representatives of the IMF and the ECB in the next period would open the way to the earliest possible start of negotiations.

Tamás Fellegi confirmed that the Government remains firmly committed to market financing and Hungary does not need to promptly draw down the IMF-EU funds. He pointed out that the agreement was actually preventative in that it would help avoid the need to rely on this kinds of support in the future, as opposed to market financing.

Minister Fellegi outlined his view that the Hungarian Government’s responsibility is, in addition to securing the funds required for economic growth, reducing the financial pressure on people and businesses via the direct and indirect means available. He emphasized that the financial security provided by the stand-by agreement with the IMF and the EU would give Hungary the opportunity to stabilise the exchange rate of the forint, cut the yield on government securities, and thus save tens of billions for the Government budget. He stated that a reduction in government security yields may proportionately cut interest on retail and corporate loans, and the drop in capital costs would render Hungary more competitive in looking to secure foreign investment. He added that the IMF-EU agreement may also be an important guarantee for banks in financing the Hungarian economy.

Tamás Fellegi stated that the Government had underestimated the unfavourable effects of the debt crisis and prolonged recession, as well as the extent of the market reaction to the measures taken, and such a loss of external and internal confidence generated by the effects was not expected. He reiterated that the permanent restoration of the confidence of markets and investors is the priority objective for Hungary.

(Press Office of Minister without Portfolio Tamás Fellegi)