Hungary govt media campaign says won't "give in to the IMF"

* Government places full-page advertisements in newspapers

* Budapest says "will not surrender Hungary's independence"

* Hungary in talks on multi-billion euro IMF/EU funding deal

* PM says Hungary could manage even without IMF deal in 2013

By Gergely Szakacs

BUDAPEST, Oct 9 (Reuters) - Hungary's government launched amedia campaign on Tuesday saying it would not " g ive in to theIMF" ju st weeks before Budapest hopes to resume talks withinternational lenders on a financial safety net to bolster itsshrinking economy.

Central Europe's most indebted nation is trying to agree amulti-billion euro loan with the International Monetary Fund andthe European Union to rein in borrowing costs and rebuild marketconfidence hurt by years of unorthodox policies.

Prime Minister Viktor Orban's ruling Fidesz has lost abouthalf of its supporters since a 2010 election landslide and hisgovernment, forced to keep a tight budget by the EU, faces weakgrowth next year in the run-up to a 2014 parliamentary election.

Full-page advertisements in five national dailies carriedslogans demanding "respect and trust" from the IMF and sayingHungary would "not surrender its independence".

With no tangible growth on the horizon and Hungariansreeling under the latest in a string of fiscal stabilisationprogrammes since 2006, pressure on Orban's government is rising.

A teachers' union is already considering a strike after thegovernment scrapped a pay rise planned for next year, while themain opposition Socialists defeated the ruling party's candidatein a western Fidesz stronghold in a weekend by-election.

Business news website HVG.hu reported on Monday that formerPrime Minister Gordon Bajnai, who implemented a previous IMFprogramme that pulled Hungary back from the brink of bankruptcyin 2008, was also considering a bid for election in 2014.

HVG said Bajnai, who led a government of technocrats backedby the Socialist party in 2009-2010, may announce his candidacyon Oct. 23 when opposition groups plan a rally to protestagainst Orban's government.

"The government is just trying to lay the ground for thetalks domestically," political analyst Zoltan Kiszelly said.

"I do not think this is linked to the talks themselves. Thetalks are not about respect and trust but whether the countrydelivers on the figures or not," he said.


Financial markets remain suspicious that Orban is simplyplaying for time in the talks and does not intend to sign up toa deal that is likely to come with hard conditions.

Tuesday's media campaign coincided with publication of theIMF's world economic outlook, which said Hungary's economy wouldgrow only 0.8 percent in 2013 after a recession this year.

The government's website cited Orban as saying on Tuesdaythat an IMF deal would make Hungary's financing situation easierin 2013 but the country would also manage without an agreement,as it has done so far this year.

He said the issue of whether or not Hungary would secure anIMF deal would be determined by the first quarter of next year.

Last week the "junk-rated" nation of 10 million people movedone step closer to an IMF/EU agreement it first requested nearlya year ago by abandoning a controversial tax on its centralbank, which prompted a rally in its currency andbonds.

Economy Minister Gyorgy Matolcsy, the architect of Hungary'sunconventional policies such as Europe's highest bank tax, alsoannounced 397 billion forints worth of new budget cuts to avoidthe loss of millions of euros of EU development funds next year.

The prospective lenders have not set a date for theresumption of talks yet and the European Commission is due torespond to Hungary's latest savings measures next month.

Hungary's forint is still central Europe's top performerwith an 11 percent gain this year, while better global sentimentand progress towards an IMF agreement helped keep bond yields toabout 7 percent from double-digits hit early this year.

That has boosted the government's room for manoeuvre in theloan talks and analysts say Budapest will be in no rush tosecure an agreement if market conditions remain supportive.

(Editing by Louise Ireland)

((gergely.szakacs@thomsonreuters.com)(+36 1 327 4748)(ReutersMessaging: gergely.szakacs.thomsonreuters.com@reuters.net))

Keywords: HUNGARY IMF/