Main Obstacles To Concluding A Loan Agreement With IMF & EU Have Been Removed

  • 12 Nov 2012 8:06 AM
Main Obstacles To Concluding A Loan Agreement With IMF &  EU Have Been Removed
In an interview for Hungarian News Agency MTI, the Prime Minister said that the government has made efforts to endure that the excessive deficit procedure Hungary has been subject to since 2004 will end. With reference to the European Commission's Wednesday report which forecast a deficit-to-GDP ratio of 2.9 percent and a growth rate of 0.3 percent for Hungary next year, the Prime Minister said that Hungary had succeeded in consolidating the financial foundations of its economy. On the basis of the report, he said, it may be concluded that Hungary's economic model is viable.

He noted that the deficit had been kept below 3 percent of GDP since 2011. At present Hungary is one of only five EU member states with a decreasing level of public debt; it is the country that is cutting debt the most rapidly.

All these mean that the main obstacles to concluding a loan agreement with the International Monetary Fund and the European Union have now been removed.

Regarding the Commission’s forecast that the deficit would rise to 3.5 percent of GDP by 2014, the Prime Minister said that Parliament has yet to approve the 2013 budget, and the 2014 deficit will highly depend on the budget Hungary prepares for that year.

Commenting on the Strategic Partnership Agreement the Government concluded with Daimler AG yesterday, the Prime Minister pointed out that German industry and the Hungarian government take a common approach towards the European economy, as they both believe that Europe can only become competitive if it reorganises and increases its industrial production capacities. The agreement indicates that both sides are seeking opportunities for relocating the company’s further production capacities to Hungary. In addition, he considers the Agreement a milestone in the history of the Hungarian economy.

Regarding the recently announced government plans to take over part of local councils' debt, the Prime Minister explained that an agreement must first be reached with local authorities, and accordingly the government is sending negotiators to each big city to thoroughly review local council debt and establish the amount justified for the state to take over. He added that the government would strive to reach an equitable arrangement with the 27 local councils in Hungary that are not in debt.

Speaking about the education system, the Prime Minister said that the government would like young people to regard their academic studies as an investment in their lives. Students will not be directed to poorly operating institutions of higher education just to keep them open, he added. He underlined that the students themselves will decide which institutions are viable and which are not.

The government will assist those universities which cannot carry out investments due to the lack of co-financing, and it also wants to assist institutions of higher education that are in debt, he said.


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