Hungary’s government is ready to fight for the country’s interests and also to compromise if necessary, Prime Minister Viktor Orban said as his Cabinet worked to revive international talks on a bailout.
Orban is committed to the flat personal income tax, which the International Monetary Fund has criticized for hurting economic growth, he said in his state-of-the-nation address in Budapest today. Orban said he is also “decided” on ensuring fiscal discipline.
“We are ready to fight and to reach an agreement in the interest of the country,” Orban said. “For us, both fighting and coming to an agreement are a means, not an end.”
Hungary wants to revive talks with the IMF and the European Union after negotiations broke down in December over Orban’s refusal to change a central bank law that the institutions said may undermine monetary-policy independence.
The EU has threatened a lawsuit against Hungary because of the legislation and two others, refusing to restart talks. The IMF has said Orban needs to show “tangible steps” to engage on all policy issues before aid talks can officially start.
The forint strengthened 0.7 percent to 290.22 per euro at 5:31 p.m. in Budapest. The currency has been the best-performing in the world in the past month, rallying after Orban reversed course on Jan. 5 by saying he was ready to compromise for a “quick” deal with the EU and the IMF.
Hungary is ready to accept a European Commission demand that an age-limit for judges should be scrapped, to settle another dispute that has obstructed talks on a bailout agreement, news website Origo reported today, citing a letter the government sent to the EU.
Hungary is also willing to accept an EU request that the country’s data-protection authority be strengthened, though it won’t reinstate a former official as data protection ombudsman, the news website said, referring to a third issue with the EU.
Hungary may be challenged to meet its debt payments this year if the euro crisis worsens and the economy slips into a recession, the IMF said on Jan. 25, underscoring the need for a financial-safety net.