Hungary likely to sign IMF-EU deal

BUDAPEST - Reuters

Mihaly Varga

Hungary expects to sign a deal with international lenders for a financing backstop close to market estimates of 15 billion euros ($18.7 billion) by the end of October at the latest, the minister in charge of the talks told Reuters.

“I believe an agreement could be sealed any time from mid-August until the end of October, so depending on whether it is a faster or slower process in terms of talks, this is the period I could see when the papers are actually signed,” Mihaly Varga told Reuters.

After a seven-month delay, central Europe’s most indebted nation expects to start credit talks with the International Monetary Fund (IMF) and the European Union next month, after ending a protracted dispute over a law that the IMF and Brussels have said hurt the central bank’s independence.

Varga, the minister who will lead the negotiations, said late on June 27 that he expected talks to proceed rapidly and a deal to be signed before the end of October.

Asked how important it was to him personally to secure a deal, Varga, a former finance minister and close ally of Prime Minister Viktor Orban, said:

“I’m personally interested in a deal and from a certain aspect I would see it as a personal fiasco if we failed to reach a deal.”

Varga, who took up his post on June 1, is a technocrat and political heavyweight in Orban’s conservative Fidesz party, who investors hope could finally put Hungary on track towards an IMF/EU funding program. Foreign investors who finance most of Hungary’s public debt have been betting on an IMF deal to bring an end to two years of unorthodox measures that deeply eroded market confidence.