The IMF loan is aimed at improving Hungary’s position, rather than helping her survive, said Prime Minister Orban Viktor in his Friday interview on the regular morning show called 180 Minutes (MR1 Kossuth, Hungarian public radio).

Viktor Orban emphasized that the IMF loan is needed to improve Hungary’s position rather than to help it survive.

He also said that the government would not involve itself in discussions on the extension of the planned transaction tax covering central bank lending.

Orban said disputes on the extended transaction tax – a source of revenue for the government's job protection action plan – would no doubt continue, but the government would not get involved in them because it needs to respect the independence of the Hungarian National Bank, and to allow it to act accordingly.

"Whether it transfers the burden, or whether it imposes it onto the banks or pays it itself, the government cannot participate in this debate," Orban said. He added that the transaction tax must be paid by all the actors involved, and the central bank cannot constitute an exception.

Negotiations can begin

After the Hungarian Parliament passed amendments to the central bank law today – after the interview of the Prime Minister, the spokesperson for the European Commission announced that the EU-IMF delegation would arrive in Budapest in connection with loan negotiations on 17 July.

The 10-point Job Protection Action Plan leads to stabilization

With regards to the timing of the plan, Orban said that the Hungarian government first had to wait for Brussels to repeal unfair penalties. He also added that “over the past two years Hungary has had to step up to push through its economic policy and we were threatened with the freezing of EU funds. Now a new era is upon us.”

Orban said that both the action plan and the social tax reduction were expected to stabilize existing jobs rather than to create new ones. He emphasized the need to support unqualified workers since he thinks they still enjoy less prestige than they should, and added that “this is an important goal of the action plan”. He also noted that those with revenue of less than six million forints per year can choose flat-rate taxation with effect from January 1.

With regards to an investment boosting scheme, to which the government will return in the autumn, Orban suggested that “The Minister for the Economy, György Matolcsy, has quite a few more plans in his drawer”.  

When asked about how far the government would go to push through its action plan Orban showed a willingness to modify it if European economic politics took a different turn.

The budget should ensure both predictability and flexibility

Regarding next year’s budget, the Prime Minister emphasized two factors: predictability and flexibility. Of the latter he said: “God alone knows when an immediate reaction will be necessitated from our side due to an unpredictable event in the Eurozone.” He underlined that the main budget figures will have to be retained, but that within the internal structure of the budget an adequate and flexible reserve fund should be ensured. Finally, he added that each budget area will receive more money than it had in the past.

(Prime Minister’s Office)