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IMF ‘emergencies department’ to visit Hungary next Monday

Saturday, June 5th 2010 - 05:16 UTC
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Incoming Hungarian Prime Minister Viktor Orban Incoming Hungarian Prime Minister Viktor Orban

The IMF is sending a senior official to Hungary for talks with the new government early next week, amid rising concerns about the country's public finances.

“Our new mission chief for Hungary, Christoph Rosenberg, is going to Budapest on Monday for a short visit to meet the new government and discuss the economic situation and prospects with senior officials” according to an IMF spokesperson quoted by the French government agency AFP.

“The IMF staff looks forward to working with the new government and, as usual, will cooperate closely with European Commission staff that will also be in Budapest”.

Viktor Orban from the centre-right Fidesz party was sworn in as prime minister on May 29. His party won control of parliament in April elections. The new government replaced a minority administration that had governed Hungary since April 2009.

Hard hit by the global economic crisis, Hungary received a 20-billion-Euro rescue from the IMF, the World Bank and the European Union in November 2008.

After tapping the IMF lifeline three times for a total of 8.7 billion Euros the Hungarian government said in November 2009 that it no longer needed to draw on the credit thanks to improved investor confidence in the country's economy and bonds.

However alarming comments by government and party officials sent the Hungarian currency, the forint, and the Budapest stock exchange plunging on Friday, and the cost of insurance against a sovereign default -- credit default swaps -- climbed as concerns mounted about a Greece-style debt crisis.

Hungarian Secretary of State Mihaly Varga said the public deficit would be 7.5% of GDP this year, nearly double the 3.8% estimated by the previous Socialist government, in coordination with the IMF.

Lajos Kosa, vice president of the Fidesz party, said the Hungarian economic situation was “very critical, the state is comparable to that of Greece” and that “the bankruptcy of the state is close.”

In an apparent attempt to calm the storm, a spokesperson for the prime minister said he would make an announcement on the economy on Monday.

Categories: Economy, Politics, International.

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