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 a media campaign on Tuesday saying it would not " g ive in to the IMF" ju st weeks before Budapest hopes to resume talks with international lenders on a financial safety net to bolster its shrinking economy.

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

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

Full-page advertisements in five national dailies carried slogans demanding "respect and trust" from the IMF and saying Hungary would "not surrender its independence".

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

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

Business news website reported on Monday that former Prime Minister Gordon Bajnai, who implemented a previous IMF programme that pulled Hungary back from the brink of bankruptcy in 2008, was also considering a bid for election in 2014.

HVG said Bajnai, who led a government of technocrats backed by the Socialist party in 2009-2010, may announce his candidacy on Oct. 23 when opposition groups plan a rally to protest against Orban's government.

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

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


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

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

The government's website cited Orban as saying on Tuesday that an IMF deal would make Hungary's financing situation easier in 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 an IMF deal would be determined by the first quarter of next year.

Last week the "junk-rated" nation of 10 million people moved one step closer to an IMF/EU agreement it first requested nearly a year ago by abandoning a controversial tax on its central bank, which prompted a rally in its currency and bonds.

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

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

Hungary's forint is still central Europe's top performer with an 11 percent gain this year, while better global sentiment and progress towards an IMF agreement helped keep bond yields to about 7 percent from double-digits hit early this year.

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

(Editing by Louise Ireland)

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Keywords: HUNGARY IMF/