Hungary Seeks IMF Support for Stimulus

Hungary is seeking the support of the International Monetary Fund (IMF) for a new policy that would add economic stimulus measures to planned spending cuts, new Finance Minister Peter Oszko told the state television MTV on Sunday.

He said the measures would not require additional funding from the IMF. Hungary was the first European Union country to secure IMF aid in October in the amount of $25.1 billion.

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IMF officials will visit Hungary next month for the quarterly review of the aid to hear details of the plans of the new government led by Gordon Bajnai, which took office this week.

It plans to widen the spending cuts already decided to 1,300 billion Hungarian forints this year and next to lead Hungary out of its worst recession since the early 1990s and keep the budget deficit below 3 percent of GDP, in line with IMF conditions.

Oszko, speaking from Washington where he took part in a meeting of world finance leaders, said the government was determined to keep to the commitments undertaken in the contract about Hungary's financial aid.

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But it is also important for the country to take measures which show that Hungary will be able to reverse a rise in its debt through restoring economic growth, he said.

"We need to find a balance course including the appropriate amount of efforts to cut spending, but we also need to stimulate the economy," he said.

"This will be on the agenda at the May round of talks (with the IMF)." "Hungary has a contract (with the IMF) and we want to keep to it," he said.

"What we are talking about is that we should negotiate the best solution for the economy, and not about trying to mobilize significant surplus funding for Hungary." Oszko told Reuters earlier that apart from spending cuts the new government would focus on lowering taxes to save jobs.

He told MTV that based on his experience in Washington he was optimistic that the programme of Hungary's government would win international approval.

"We experienced a very positive, optimistic attitude from both the IMF and the European Union," he said.

The government expects Hungary's economy to contract by 5.5-6.0 percent this year. The country's unemployment rate is seen rising to above 10 percent in the next months.

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