Brussels, 05/10/2012 (Agence Europe) - EU Economic and Monetary Affairs Commissioner Olli Rehn sent comments on Thursday 4 October 2012 to the Hungarian government in the talks between the country and the EU and International Monetary Fund over a €15 billion loan, explained a European Commission spokesman, Olivier Bailly, on Friday 5 October. The IMF sent the Hungarian governments comments earlier in the week asking, according to media reports, for further information about the planned budget impact of various measures announced by the government and the financial transactions tax to be levied on the Hungarian National Bank on retail banks.
On Friday, the Hungarian government announced new austerity measures and said it had abandoned the plan to levy the financial transactions tax on the central bank, says Reuters. This U-turn by the government will remove a major obstacle to the resumption of aid talks with the IMF and the EU because the tax had been criticised for damaging the central bank's independence. Bailly would not comment on when new EU and IMF experts might be sent to Budapest. To raise the money that would not now be raised from the tax on the central bank, Hungarian economy minister Gyorgy Matolcsy said public spending would be frozen at 133 billion florins (€470 million) in 2012 and the public deficit would be cut next year by a futher 39 bn florins to keep it at 2.7% of GDP in 2012 and 2013. Budapest will cut back co-financing of EU programmes and has announced a pay freeze for teachers. (SP/transl.fl)