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CB governor Simor willing to work for free to enable agreement with international lenders

Hungary's government expects further debates with the European Union about the oath of office and salary of the central bank governor, news agency MTI cited deputy prime minister Tibor Navracsics earlier last week. He was quoted as saying Hungary was reluctant to change a public sector pay ceiling, which resulted in a 75 percent cut in the salary of central bank Governor András Simor.

As a result of this Simor has announced last Friday that he intends to end this dispute as soon as possible, because it could thwart an agreement with the international lenders, from which Hungary reportedly hopes to get a "safety net" of EUR 15-20 billion. He said he is ready to fulfil his obligations as central bank Governor for a single forint, with retroactive effect if needed. Simor has already notified the Prime Minister of his decision. The law amendment affecting the salary of central bankers and which is incompatible with European regulations entered into effect in September 2010. Simor had already called on the cabinet to terminate this unlawful state, indicating his intention to discuss the matter, but he was given no response, the NBH said in a statement today. Simor believes, however, that it is one of the basic conditions to strike a credit deal with the international lenders that this situation is resolved. He reiterated that for him "the salary of central bankers was never about money but about protecting the independence of the central bank and about fully respecting and restoring legality." Simor is willing to give up his remuneration as central bankers and offer the money to support gifted but disadvantaged students of economics. In his letter to Orbán, Simor emphasised that the modification of central bank policymakers' remuneration is also discriminative because NBH officials employees are neither public employees, nor civil servants; they are senior officials of a state-owned public limited company. The law maximising salaries in the public sector was not applied on other state-owned enterprises or the management of state-owned banks, Simor noted. "I am convinced that the European Union and the International Monetary Fund will only grant credit only to a country that respects the central bank's independence, the EU Treaty and its own laws." – Simor noted.

Source: Portfolio, Reuters

Last Updated on Friday, 30 August 2013 09:11

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