April 26, 2012 / 5:39 PM / 7 years ago

IMF to talk to Hungary once cbank autonomy assured

WASHINGTON (Reuters) - The International Monetary Fund said on Thursday it is ready to start negotiations with Hungary on financial aid once Budapest has taken steps to safeguard central bank independence.

This comes a day after the European Union gave the green light for talks with Hungary, ending a five-month dispute over its central bank’s autonomy.

“The Fund welcomes recent progress in Hungary’s discussions with the European Commission,” said an IMF spokeswoman in response to a query from Reuters.

“The Fund is ready to start negotiations as soon as adequate steps are taken to ensure central bank independence as has been discussed with the Hungarian government.”

Hungary has been locked in a legal row with Brussels over legislation which the EU says hurts the independence of its central bank.

It needs the IMF and EU aid to cut high borrowing costs and restore confidence in the economic policies of the most heavily indebted nation, as a percentage of GDP, in Central Europe.

At the heart of the dispute are Hungarian moves to cut the pay of the bank’s governor and senior officials, breaking EU law that prohibits such reductions during a governor’s tenure.

Budapest argues the cuts are part of a public sector-wide salary reform and not directed at the central bank. Early this week, the government said it would push through proposed changes to the bank law and consult further with the European Central Bank, but the salary question would remain.

Reporting by Lucia Mutikani and Lesley Wroughton; Editing by James Dalgleish

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below