Until recently no accord could be reached on the amount or type of IMF-EU credit line at negotiations held with the International Monetary Fund (IMF) and the European Commission; currently the viewpoints of the parties are being tabled, Minister of State Zoltán Cséfalvay from the Ministry for National Economy said in Berlin.

At the 22nd Hungarian-German Forum, the Minister of State stressed that the Hungarian side has presented its views “relatively clearly”, expressing even “with a billboard campaign” to what lengths the Government is willing to go during the meetings. Among others, he emphasized that cutting old age pensions and modifying the flat rate personal income tax are entirely ruled out.

The Government expects a safety net by concluding an agreement with the EU and the IMF, which would result in lower yields of government securities and greater stability, but it would be “no cure-all”. Coming to an agreement would not solve all outstanding issues, there would still be much to do, among others in the fields of stimulating investments, employment, tertiary education or the system of local governments, he added.

Speaking about the Forecast of the European Commission published on Wednesday, he stressed the report has proven that Hungary had “done its homework” regarding deficit and debt reduction. The general government debt-to-GDP ratio will remain below the “magic 3 percent” margin this year and next, and with regard to cutting general government debt, Hungary was one of only three countries out of the EU 27 which have significantly decreased their debt burdens. In the period of 2010-2014, general government debt as a percentage of GDP will decline by 5 percentage points, he stated.

Since the Government took to office, in addition to the change in debt and deficit levels there is also an ongoing “trend reversal” in employment, as more and more people have been hired and growth in the rate of activity has not been solely the result of public employment schemes.

In response to questions which arose at the forum concerning Hungary’s procrastination over fulfilling euro-zone accession requirements, the Minister of State stressed that in the opinion of the Government “there will come a time when Hungary will have to join the euro-zone” and it is doing everything at its disposal to achieve this end. He responded to arguments condemning the predictability of the taxation system and the frequent changes to it by assuring the audience that “the majority of changes have already been put in place and the taxation system will stabilize next year”, after what he said had been an unfavourable two-year period from the aspect of predictability.

(Prime Minister’s Office)