Economy minister: Hungary will not borrow again from IMF

Sep 3, 2010, 14:14 GMT

Budapest - Hungary does not intend to borrow from the International Monetary Fund (IMF) again, Hungarian Economy Minister Gyorgy Matolcsi confirmed at a meeting of business leaders in the capital on Friday.

Matolcsy stressed, however, that Hungary will stick to the target of a budget deficit of 3.8 per cent this year, an aim it had agreed upon with the IMF and the European Union as a condition for a 25- billion-dollar rescue package in 2008.

'The loan agreement expires in October, and the Hungarian government does not wish to sign another, as there is no need,' the minister was quoted as saying by the state news agency MTI.

Matolcsy cited recent bond issues that he said demonstrated Hungary is capable of financing its deficit through the international markets.

Hungary landed in the spotlight in July, when an IMF delegation left the country early after talks with the government hit an impasse.

Prime Minister Viktor Orban subsequently spoke of Hungary seeking to regain its 'financial autonomy' and said his government would not have economic policy dictated from abroad.

The Hungarian economy shrank by 6.7 per cent in 2009, and unemployment climbed to over 11 per cent.

Nevertheless, a protracted austerity drive, including cuts to pensions and public sector pay, meant that the small Central European country recorded one of the lowest budget deficits in Europe, at 4 per cent last year.