Economy minister confirms Hungary will not renew IMF loan agreement (adds central bank purchases of corporate bonds)

Budapest, September 3, 2010 (MTI-ECONEWS) – Hungary continues to ask for and get “technical assistance” from the IMF, but it will not borrow from the institution again, National Economy Minister Gyorgy Matolcsy said at an event organised by business association MGYOSZ on Friday.

Hungary can finance its state debt entirely on its own, Mr Matolcsy said. Hungary and the IMF will remain strategic partners, he added.

    He acknowledged that there would have been a financial meltdown in the country had it not been for the financial aid package from the IMF and EU, but the contract on the IMF standby arrangement expires in October, and the government does not want to make a new loan agreement, as it is not necessary, he said.

    The government is standing by the 3.8pc-of-GDP general government deficit target for 2010, Mr Matolcsy said.

    The government is committed to a tight fiscal policy, Mr Matolcsy said. There is no possibility for economic stimulus from the budget now, he added.

    The government is preparing for another wave of the crisis until the end of 2012, but it sees dynamic growth in Europe afterward, Mr Matolcsy said.

    The government believes monetary policy could be the impetus for an economic pick-up, but the National Bank of Hungary does not share this opinion, he said.

    There are other monetary tools beside ones that affect exchange rates and interest rates, Mr Matolcsy said. He suggested that the NBH could help stimulate the economy by buying corporate bonds, mainly with the involvement of state-owned Hungarian Development Bank.








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