Brussels, 13/01/2012 (Agence Europe) - Under pressure from the EU and the IMF (International Monetary Fund), the Hungarian government seems to be taking a less belligerent line, announcing on Friday 13 January that it is prepared to adjust partially its controversial new central bank legislation. On Hungarian radio station MR1 on Friday morning, the conservative prime minister Viktor Orban said that the Hungarian government agrees with a number of the issues raised by the European Commission's legal department and he did not see any obstacles to changing them, but there are other issue where the two sides are still far from agreement.
On 1 January 2012, a new constitution came into force in Hungary, giving the government greater influence over the central banks and other institutions, which are criticised by opponents as a slide into authoritarianism.
Orban had already said he was prepared to discuss changes to the controversial bank legislation and shortly after the head of the IMF, Christine Lagarde, said in Washington that the IMF was only prepared to lend to Hungary if there were “tangible steps” demonstrating Hungary's good faith, Orban said that he was prepared to negotiate. Lagarde has been in meetings with Hungarian negotiator Tamas Fellegi, who is responsible for negotiating a loan of between €15 billion and €20 billion from the IMF and EU to bolster Hungary's finances. The country is close to defaulting on its loans because the markets are charging high interest rates that are not affordable in the long-term.
The IMF and the EU interrupted a fact-finding mission in Budapest in December in protest at the introduction of the new central bank rules and the Hungarian central bank question was discussed by the European Central Bank (ECB) in Frankfurt on Thursday. ECB President Mario Draghi said that the bank was genuinely very concerned about the constitutional changes introduced in Hungary, which jeopardise the independence of the country's central bank.
A spokesperson for EU Commissioner Olli Rehn said on Friday: “We are in close contact with our IMF partners at all levels. Mr Rehn personally has been in touch in the last few days with Mrs Lagarde on a number of issues, not just Hungary. I refer you to the statement that the IMF has published; it is a statement that we fully share. There are various elements in this statement that we will find familiar in our communication, especially when it comes to the necessary conditions in order to start this discussion on a precautionary financial assistance programme. But for the rest, let's wait for Mr Rehn to meet Mr Fellegi in Brussels.”
Rehn's spokesperson added that the Commission has said on many occasions that central bank independence is a necessary precondition for any talks on financial aid for Hungary, and said that the Commission's legal department was working on the question. As guardian of the treaties, the Commission must ensure that Hungary's legislation on its central bank complies with Article 130 of the Lisbon Treaty.
In Strasbourg on Tuesday 17 January 2012, the Commission may decide in its weekly meeting to send Hungary warning letters (the first stage in infringement proceedings) asking it to change its laws to ensure an independent legal system and an independent central bank. (LC/transl.fl)