Hungary Opposition Sees Government Stalling In EU/IMF Talks
February 28 2012 - 8:44AM
Dow Jones News
Hungary's government is playing a tactical game so it can
eventually avoid signing an agreement with the European Union and
the International Monetary Fund, the head of the country's biggest
opposition party said.
"If you asked me in January I would have said it's impossible
that the government doesn't want a deal. Today, I see tactical play
aimed not at improving negotiating positions but dodging a deal,"
Chairman of the socialist MSZP party Attila Mesterhazy told Dow
Jones Newswires in an interview, echoing some analysts'
concerns.
"Following the relatively quiet session from the previous weeks
we expect more concerning political news to turn market focus on
risks related to a serious delay or potential freeze in the IMF
talks," Citigroup analyst Eszter Gargyan said in a note.
The government changed its approach early January, when
Hungarian assets saw a major selloff, and decided to revise its
earlier reluctance to cooperate with international lenders.
However, since then, the process has been bogged down in disputes
about preconditions, namely pieces of legislation that Hungary must
amend for formal talks to start.
"This isn't about Mr. IMF coming over and telling the helpless
Hungarian prime minister what he needs to do and how deep he has to
reach in his pockets," Mesterhazy said. His MSZP party was in power
when Hungary was forced to turn to the IMF for support at the peak
of the Lehman Brothers crisis in 2008.
"The EU/IMF don't dictate specifics, they instead expect a plan
from the Hungarian government about the measures they deem adequate
to achieve the necessary structural changes," he said.
"Based on the communication of the past month, I'm becoming more
convinced that the Hungarian government is gambling. I don't think
the prime minister gave a clear political mandate to the
negotiating delegation," Mesterhazy said.
His view is that the government is hoping to buy time with
delaying the talks and amble on until the economic environment
improves and Hungary is able to finance itself from the
markets.
In contrast, Mesterhazy's MSZP believes Hungary is very much in
need of EU/IMF backing. He sees the need for a package of 20
billion to 30 billion euros, a similar magnitude to the support
received in 2008.
However, in contrast to the government's insistence of the
EU/IMF money functioning as a safety net, the MSZP would actually
spend part of the cash implementing structural overhaul, leading to
a sustainable economic path in the longer term, Mesterhazy
said.
"When we negotiated with the IMF, they were more than ready to
accept a program that entails growing budgetary costs, if it pays
off in the long term and leads to savings," Mesterhazy said.
-By Veronika Gulyas and Gergo Racz, Dow Jones Newswires,
+361-267-0622; gergo.racz@dowjones.com
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