Monday 22 Jan 2018
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Hungarian Ministerial Candidate For IMF Negotiations Heard In Parliament

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Hungarian Ministerial Candidate For IMF Negotiations Heard In Parliament
Mihály Varga, candidate for minister without portfolio for leading the negotiations between Hungary and the IMF and the EU was heard today by the relevant parliamentary committee which supported his appointment in that capacity. As is known, Viktor Orbán is reshuffling his cabinet in some positions; Mihály Varga, who was previously State Secretary of the Prime Minister’s Office and also Finance Minister at the time of the first Orbán Government, will take over the lead of the EU-IMF negotiations from Tamás Fellegi as of 1 June.

Mihály Varga mentioned, as the tasks in hand in the capacity of minister, the reinforcement of trust in Hungary, the erection of a „protective net” and the conclusion of an agreement. In his opinion, it is not a problem if the IMF agreement to be concluded eventually is similar to that reached in 1996 as that agreement, too, merely served as security and the government did not actually draw on it, he said. (In 1996, Hungary agreed with the IMF on a stand-by facility of the amount of SDR 264.18 million for a term of 23 months.)

The ministerial candidate told the committee that the IMF/EU facility agreement offers the country the potential for major savings and benefits. In answer to the question concerning the possible size of the facility agreement, he stated that Hungary would need an amount that would provide sufficient security for a period of two to three years.

He repeated that the Government was aiming to obtain a precautionary facility which would provide a safety net for the Hungarian economy and would thereby enhance trust in the economy; this may in turn lead to the reduction of the country’s debt service reaching 4-4.3 per cent of GDP.

He reiterated that the Hungarian Government had recently sent two important documents to Brussels; the Convergence Programme and the Széll Kálmán Plan 2.0 in which the Government demonstrated the reduction of the budget deficit. He believes that, in the wake of the contemplated measures, the deficit of the budget may be comfortably kept below 3 per cent also next year. In Varga’s opinion, this year’s GDP indicators meet with the relevant expectations; "we are in control of the situation”, he said. Growth may begin in the next half of the year, owing to the fact that the base effect will be eliminated, external demand will increase and a large automobile industry project will commence production.

Varga expressed hope that negotiations with the EU and the IMF may begin after the termination of the excessive deficit procedure in June. He added that the Government fully perceives that the competent officials of the EU and the IMF are awaiting the 23 June Brussels decisions. The ministerial candidate also sincerely hopes that the negotiating parties will be able to prepare the negotiating mandates by then. The ministerial candidate praised the work done by his predecessor, Tamás Fellegi as, in his words, „we have reached the point where negotiations may commence”. We are now awaiting a green light from the IMF and the EU so that the negotiations may begin in earnest, he said.

The ministerial candidate sincerely believes that the negotiating partners, too, are preparing for the negotiations to commence in the summer.

Varga also said that, as one of his first duties, he will contact the governor of the central bank. „Our interests point in the same direction”, he stated, and believes that these identical, overlapping interests may create sufficient harmony between the central bank and the Government.

(Ministry of Public Administration and Justice)