Hungary PM Denies Need for Further IMF Bailout Aid

Gemany Chancellor Angela Merkel (R) receives Prime Minister of Hungary Viktor Orban (L) in front of the German Chancellery in Berlin, Germany, 21 July 2010. Photo by EPA/BGNES

Prime Minister of Hungary Viktor Orban has declared that his country did not need any further bailout aid agreements with the International Monetary Funds, and that it should be talking to the EU instead.

Speaking in Berlin on Wednesday, where he met with German Chancellor Angela Merkel, Orban declared that his country was a world champion in cutting state spending, and therefore did not need to borrow more money from the IMF.

"Hungary and the International Monetary Fund had a deal, which expires in October. So there is no point in negotiating long-term questions with the IMF. Once it expires, we no longer have to negotiate with the IMF, but with the European Union ... We have to agree with the EU, not with the IMF, how we will reduce our budget deficit ... to less than three percent. We are world champions when it comes to cutting spending,” he said as quoted by BGNES.

In his words, Hungary will manage to bring its budget deficit down to 3.8% of the GDP in 2010, as it is supposed to, under its agreement with the IMF and the EU for a credit line of EUR 20 B ( EUR 12.5 B provided by the IMF, EUR 6.5 B – from the EU, and EUR 1 B – from the World Bank), singed in the fall of 2008.

German Chancellor Merkel has not criticized Orban for his statement, which comes days after on July 17, the IMF and the European Union ended talks with Orban's government on July 17 without endorsing his plans to rein in the budget deficit.

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