Hungary Needs IMF Accord in First Half to Restore Confidence, Fitch Says
Hungary needs to secure a bailout from the International Monetary Fund in the first half to restore market confidence, said Paul Rawkins, head of the emerging Europe sovereign ratings group at Fitch Ratings.
“Hungary’s problems are very country specific; there are problems in the region, but a lot of Hungary’s problems are of its own making,” Rawkins said in an interview on Bloomberg Television today. “As a result, they undermine confidence and it’s very hard to restore that confidence.”
The IMF and the European Union broke off talks last month on Hungary’s bid for a bailout after Prime Minister Viktor Orban refused to withdraw legislation that the institutions said may undermine the central bank’s independence. Hungary’s chief negotiator Tamas Fellegi started preparatory talks with IMF representatives in Washington yesterday and is scheduled to meet IMF Managing Director Christine Lagarde on Jan. 12, state newswire MTI reported.
“Hungary isn’t going to fall over tomorrow, it has some cash in the bank, but it certainly needs to have a deal within the first half,” Rawkins said.
The forint and Hungarian stocks gained on the report that Fellegi, the minister in charge of securing international financial aid, had started negotiations.
Hungary’s currency advanced 0.4 percent to 314.30 per euro by 11:27 a.m. in Budapest. The benchmark BUX stock index gained 0.6 percent as OTP Bank Nyrt., Hungary’s largest lender, rallied 1.7 percent. Tamas Fellegi, started talks with the IMF in
Hungary is open to bailout talks without any preconditions and would accept “any kind” of credit line that strengthens market financing, Orban said on Jan. 8.