Market Commentary and Intraday News
Hungary PM Rejects IMF Loan Conditions
258 days ago
(RTTNews) - Hungarian Prime Minister Viktor Orban has rejected the conditions attached to a loan it sought from the International Monetary Fund last year and said the government will present an alternative proposal to the global lender in the next few days.
In a video posted on his Facebook page, Orban said the terms and conditions of the loans are "unacceptable." He said the list of loan terms is long and are not in Hungary's interests.
The IMF has asked Hungary to cut pensions and to roll back tax on banks, which according to Orban, do not serve the nation's interests. The government will present an alternative proposal for the negotiations in the coming days, he said.
Hungary requested an IMF creditline worth EUR 15 billion in November last year. However, Hungary's tough stance on the loan terms is delaying the aid deal.
The government's unorthodox policy reforms, including the one that limits the central bank's independence have made the EU/IMF deal tough and have also invited the European Union's ire which once threatened legal action against the country over its new constitution.
The government policy moves also prompted the three world's leading rating agencies to downgrade the country's credit rating to "junk" status.
The economy slipped into recession in the second quarter, with nearly half of its industries recording stagnation. Gross domestic product decreased 1.2 percent year-on-year, after falling 0.7 percent in the first quarter.
In August, Hungary's central bank reduced its benchmark interest rate by 25 basis points to 6.75 percent, after keeping it unchanged for seven months in a row.
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