freelogoOur objective is to provide English speaking readers interested in Hungary with a well balanced view of political activities in Hungary by featuring contents from various printed and online sources together with our own commentaries. We are convinced that Hungary is built on all sorts of different ideas, thoughts and opinions and, despite of the new Media Law, our aim is to provide an alternative and reliable source of information – contrary to the one-sided press of the government – for those who want to hear the voice of a free Hungary.

Hungary government fails to convince EU Commission

Hungary offered concessions to the European Central Bank on Wednesday, addressing some but not all of the objections from European institutions that have blocked the country's bid for international aid to keep it solvent. The government sent the ECB a draft amendment to a law that European institutions say would undermine the independence of Hungary's central bank.

The EU launched legal action against Hungary in January over this and other legislation that Brussels says conflicts with EU law and also hurts the independence of the judiciary and the data protection authority.

Prime Minister Viktor Orbán has backed down in his standoff with Brussels and the EU's top economic official Olli Rehn said in a statement earlier he saw a willingness by Hungary to meet the demands of the European Union's executive Commission. But while the Commission will take no further legal action on the central bank impasse, it was still cautious and said it would move forward with legal proceedings on data protection and the retirement age of judges. "I welcome that Hungary is ready to correct its central bank legislation. However, we need clear commitments," said Rehn, the EU's Economic and Monetary Affairs Commissioner.

The draft law sent to the ECB would withdraw rules about the dismissal of Monetary Council members and the right of the government to receive the agenda of the panel's meetings and send a representative to the meetings, the Economy Ministry said.

But the Commission has also objected to the text of the oath which the central bank's leaders take, and cuts in their salaries. The ECB has criticised an expansion of the bank's Monetary Council and the appointment of a third deputy governor.

Orbán needs an International Monetary Fund deal to rebuild investor confidence in his unorthodox economic policies, after two years of measures that included Europe's biggest bank tax and a renationalisation of private pension fund assets. Budapest is also being pressed by the Commission to cut its deficit - or face losing access to 495 million euros in EU funds.

The Commission declined to comment on recent statements by senior Hungarian officials that talks could soon start on a precautionary standby loan from the Washington-based lender.

Hungary's forint, which plunged to a record low versus the euro in the first week of January, has firmed sharply in the past few weeks on hopes for a quick agreement with the IMF.

But the currency weakened against the euro on Wednesday on concerns that the timetable for talks had slipped further back, before coming off a session low on news of the letter to the ECB.

Initially markets expected a deal by April; now analysts project an agreement could be sealed by the end of June.

The Commission has said both it and the European Central Bank needed to see the draft legislation that Hungary is proposing, as well as confirming its plans to stop issuing official press releases criticising monetary policy decisions of the Hungarian central bank.

The Commission said it wanted more assurances that the central bank governor's wages would no longer be used "as a tool to exercise pressure and a breach of independence of the central bank".

In a sign of the pressure on Budapest, the Commission escalated its legal proceedings on the issues of retirement ages for judges - which it said would force more than 270 judges and prosecutors to retire - and the independence of the country's data protection supervisor.

"We still have serious questions regarding potential violations of EU laws," said the EU's Justice Commissioner Viviane Reding, referring to the two issues.

A failure to meet the concerns of Brussels could end up in the European Court of Justice, which could in turn order Budapest to act and impose fines and withhold more EU funds.

With the forint firmer and yields on government bonds back at about 8 percent, down from peaks of 11 percent in early January, the Hungarian government is no longer under immediate pressure to sign a quick deal with lenders.

In February, Hungary said it could push the dispute on judges' retirement ages all the way to court.

"My nagging suspicion all along has been that the Orban administration would only do an IMF deal if forced by the market to do so," said Timothy Ash at RBS.

"Arguably the forint at current levels is not at a level that the government thinks that it has to cut a deal with the European Commission/IMF at all or any cost - it still thinks that it has wiggle room to negotiate a little more with the Commission, prior to getting agreement to begin talks on a formal IMF programme."

Given Hungary's high debt and foreign currency debt exposure, such a strategy may not be viable if investor sentiment sours.

Here you can find the European Commission's press release:

Source: Reuters

Last Updated on Friday, 30 August 2013 09:11



Written on 21/12/2017, 21:09 by admin
jerusalemJerusalem, the eternal capital of the state of Israel and the Jewish people, finally got the official recognition which was overdue for decades....
Written on 13/09/2017, 20:13 by admin
guest-post-eu-and-orban-two-good-friendsThe decision of the European Court of Justice, according to which Hungary should accomodate more than one thousand refugees is at the same time appaling...
Written on 06/10/2016, 19:58 by admin
guest-post-the-day-after-the-referendumThe much anticipated referendum about the resettlement of migrants in Hungary was declared invalid, however, those who voted overwhelmingly rejected the...
Written on 23/06/2016, 06:31 by admin
disintegration-or-something-else-gyurcsany-s-solutions-to-the-ills-of-western-democracies  Something has gone wrong. Quietly, but ever more noticeably, more and more people in more and more places are in revolt. In the American...
Written on 06/04/2016, 19:20 by admin
how-germany-and-its-leftist-liberal-supporters-killed-solidaritySolidarity. This is the word that is probably is the most used and misused term in European politics. Its original meaning is supposed to mean to show...
Written on 23/03/2016, 20:30 by admin
the-orban-regime-can-only-end-in-failure  Change in the Orbán regime is only possible in the event of its downfall, so ruling Fidesz either becomes successful with its current set of...
Written on 23/03/2016, 20:20 by admin
anger-or-resignation  No matter how hard Mr Orbán is trying to get rid of his old cronies, he just cannot get rid of himself. He is too old for his system. The...
Written on 14/01/2016, 20:51 by admin
europe-s-new-yearThe European continent had a very difficult year in 2015, but that may be dwarfed by 2016. The most heated issue will be, without a doubt, the migration...
Written on 09/12/2015, 14:16 by admin
the-secret-diaries-of-viktor-orban-nov-dec-2015November 14th 2015I awoke to the shocking news about the Paris attacks last night. Words cannot express my feelings of shock.It turns out that one of the...
Written on 12/11/2015, 14:31 by admin
spies-in-the-newsroom   According to a new scheme, the government might place spies in the newsrooms, to have a better view of what is being written. This all...
Joomla templates by Joomlashine