Hungary reached a compromise on a disputed central bank bill, which blocked the country’s bailout talks for seven months, according to Mihaly Varga, the country’s chief negotiator for international aid.
A new amendment “appears” to have “everyone’s support,” including Magyar Nemzeti Bank President Andras Simor, Varga told MR1 state radio in an interview today. The bill will be submitted to Parliament this week and lawmakers may approve it next week, Antal Rogan, head of the ruling party’s parliamentary group, told reporters in Budapest.
Hungary requested International Monetary Fund aid in November as the country’s credit grade was cut to junk and the forint fell to a record low against the euro. Talks have yet to start because the IMF, the European Union and the European Central Bank objected to a central bank law, which they said threatens monetary-policy independence.
“We’ve reached a compromise that, according to the current information, is favorable to everyone,” Varga said. “It appears that the central bank will also be a partner in sending a supporting letter to the IMF, ECB and European Commission to inform them” of the bill.
The forint gained 0.6 percent to 292.01 per euro by 6:08 p.m. in Budapest, reaching the strongest intra-day level since May 15. Greece’s election result, where gains by pro-bailout parties reduced the chances of contagion and improved the outlook for Hungary’s debt financing, helped the currency, Varga said. The results eased concern that Greece would be forced out of the euro.
The compromise on the central bank includes a letter Prime Minister Viktor Orban will send to the ECB and the European Commission, the EU’s executive arm in Brussels, assuring them that he won’t name additional rate-setters to the Monetary Council and won’t name a new vice president before Simor’s term expires in March.
The bill will also limit the number of non-executive Monetary Council members so they don’t exceed twice the number of executive members, Varga said. The Monetary Council currently has seven members, three executive members composed of Simor and his two deputies and four non-executive members.
“This weekend it seems that we’ve succeeded in concluding talks about the central bank bill and we’ve managed to draw up an amendment which we can submit this week,” Varga said. “I think with this the last serious obstacle to starting talks has been overcome.”