IMF says no date set for fresh talks with Hungary
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IMF says no date set for fresh talks with Hungary

www.reuters.com   | 31.08.2012.

BUDAPEST (Reuters) - The International Monetary Fund (IMF) and the European Union do not yet have a date for further talks with Hungary on financial assistance, an IMF spokesman said late on Thursday, intensifying uncertainty over the timing of a much-awaited deal with lenders.
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Budapest had consistently delayed talks by resisting IMF and EU demands on a number of policy issues earlier this year but loan negotiations eventually started in July.

Any signs that a deal could be getting further away could weigh on the forint currency.

Two sources familiar with the situation told Reuters that after their initial visit to Budapest in July, lenders left behind a list of tough conditions and the government needs to respond to those before talks can resume in the autumn.

"We do not have a date for the next visit to Budapest. We are in touch with the Hungarian authorities and with our European partners on those issues that were discussed in July," IMF's director for external relations Gerry Rice told a news briefing late on Thursday.

He said the dialogue started in July with the Hungarian government was continuing.

"Conclusion of those discussions will require agreement on specific policies in a number of areas, including on balanced and sustainable measures to achieve the planned fiscal consolidation and structural reforms to support higher potential growth," he said.

Hungary first signaled in November 2011 that it would seek a financing backstop from the IMF and EU. After months of delays, talks finally started in July, triggering a rally in Hungarian assets.

An IMF-led deal would probably lower junk-rated Hungary's high borrowing costs and shield its vulnerable forint currency amid a deepening euro zone debt crisis that has hurt appetite for debt in a raft of emerging markets.

But Hungary and its lenders disagree on a range of issues, including the growth outlook for next year, taxation issues and a new financial transaction tax also levied on the central bank.

The IMF said in July that Hungarian policy should shift away from ad hoc tax measures towards streamlining public expenditures and that the economy faced several challenges due to its high public and external debt, strained bank balance sheets and shaky investor confidence.

The European Central Bank sharply criticized the transaction tax, saying it impaired the central bank's independence.

Daily newspaper Nepszabadsag said on Friday, citing unnamed sources, that the government did not know when talks could resume with lenders.

Prime Minister Viktor Orban said in July that he expected the lenders' team to present its views on the 2013 budget and a detailed list of preconditions for financial assistance which the government would respond to in September.

(Reporting by Krisztina Than; Editing by Louise Ireland)



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