Hungary’s Orban Wants `Swift’ IMF Deal, Ready to Support MNB

Hungarian Prime Minister Viktor Orban wants to obtain an International Monetary Fund loan “as soon as possible” and pledged the “closest possible” cooperation with central bank President Andras Simor.

The Cabinet agrees with the Magyar Nemzeti Bank that it’s in Hungary’s interest to reach a quick agreement with the IMF and it sees a “good chance for swift talks,”, Orban told reporters in Budapest today after a meeting with Simor.

Talks for Hungary’s second bailout in four years broke down last month as Orban, who shunned the IMF since taking office in 2010, refused to abandon a central bank law that the EU said threatens the monetary authority’s independence. The Cabinet must prove that’s not the case before talks can restart, the European Commission said yesterday.

“It’s our joint position that the government and the central bank must cooperate in the closest possible way for the sake of confidence in the forint,” Orban said after the meeting. The government will support the central bank “in everything” it does to ensure the forint’s stability, Orban said. Simor didn’t attend the press conference.

The forint strengthened 0.5 percent against the euro to 317.38 at 12:41 p.m. in Budapest after falling to a record low 324.24 yesterday. The yield on the benchmark 10-year government bond fell the most since Nov. 28, declining 48 basis points to 9.917 percent after rising to as high as 11.34 percent yesterday, according to generic prices compiled by Bloomberg.

‘Basic Principle’

The central bank’s independence is a “basic principle” for the government and the bank has an “exclusive right” to control the country’s foreign reserves, therefore the government “doesn’t even deal with” this issue, Orban said. Simor “can count on the support of the government, including his personal support,” Orban said.

News website Index on Jan. 3 reported that Hungary may use part of the central bank’s foreign-currency reserves to repay 187 billion forint ($775 million) of municipal debt.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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