News - Hungary needs further help from IMF - Bokros

Hungary will beyond a doubt need to extend the credit facility granted by the International Monetary Fund (IMF) last autumn, said Lajos Bokros, former Finance Minister, in Washington at talks with IMF officials.

Lajos Bokros head of the list of minor opposition party the Hungarian Democratic Forum (MDF) in European Parliamentary elections, met John Lipsky, First Deputy Managing Director of the IMF and Marek Belka, European Department head at the Fund in Washington on Wednesday.

Bokros said he had already shared his views about the IMF credit line with Prime Minister Gordon Bajnai, strongly suggesting him to start talks with the IMF without delay. He hinted that the IMF management appears to have open ears to the matter.

Demand for Hungarian government securities is unlikely to grow substantially in March next year and it would be the worst if pre-election jitters coincided with the expiration of the IMF loan, Bokros said.

Bokros urged the IMF to take a flexible approach towards Hungary if it sees that the cabinet does its utmost to have a Plan B in case of a larger-than-expected economic contraction and comes up with measures that show its determination to stabilise the economy.

The government should have an emergency scenario in case GDP contracts not by 5.5-6.0% but by 7-8%, he said. Such a situation may occur irrespective of the steps the cabinet is taking, so Hungary needs to be prepared if it wants to keep its budget deficit below an acceptable level and does not want to shatter the confidence of investors totally, Bokros added.

Bokros, who also met World Bank President Bob Zoellick, reiterated that while the MDF supports the government crisis management ideas, albeit not all of them, these would need to come together with structural reforms, even in such a short period the current cabinet has (until next elections).

Source: www.portfolio.hu