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Monday 28 May RNW - News and analysis from the Netherlands in 10 languages, worldwide 24/7 on radio, television and online

EU-IMF quit Hungary talks, cite pressure on bank

Published on 16 December 2011 - 5:21pm
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EU and International Monetary Fund experts preparing a new credit line for Hungary left the country ahead of schedule Friday on concerns over the future independence of the country's central bank.

"The European Commission has decided, in accordance with the IMF, to interrupt its preparatory mission," said Economic Affairs Commissioner Olli Rehn's spokesman Amadeu Altafaj, with the EU executive citing political efforts to influence the central bank in Budapest.

Hungary sought a precautionary credit line of 15-20 billion euros ($19-26 billion) from the IMF and the European Union after the country ran into trouble raising money on the bond markets and its currency, the forint, fell sharply against the euro.

An IMF delegation led by mission chief Christoph Rosenberg arrived on Tuesday to prepare for the talks, which were due to begin in the new year, according to the head of the IMF's delegation in Budapest Iryna Ivaschenko.

But the delegations left early because of new legislation tabled in parliament on Thursday which would end the independence of the central bank.

"The European Commission is concerned about the intention of the Hungarian authorities to push forward with the adoption of laws that can potentially undermine the independence of the central bank," the EU executive said.

The Commission said the European Central Bank had not been sufficiently consulted and the government had rushed the changes into parliament when the EU and the IMF had said they would discuss the issue during "formal negotiations on a possible precautionary financial assistance planned for early next year."

The Commission stressed that the "independence of central banks is one of the corner stones of the Maastricht Treaty (which) prohibits member states from seeking to influence national central banks in the performance of their tasks."

In the wake of reports in Hungary that the talks had ended, the forint fell to 303.42 to the euro at 1211 GMT from around 301 forints earlier.

The government spokesman's office in Budapest told AFP: "Informal talks have ended, formal talks are to start in January."

© ANP/AFP

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