The Hungarian government is confident that sufficient progress has been made in its negotiations with the International Monetary Fund (IMF) and the European Commission over its controversial central bank law, and it believes talks can resume on a hoped-for economic development aid package for the country, the Hungarian Economy Minister told CNBC on Wednesday.
Relations between Hungary, the European Union (EU) and the IMF have been strained for several months since the country passed a law related to the independence of its central bank in December 2011. The EU and IMF have been gravely concerned by the law, both of them saying it limits the independence of the Hungarian central bank and allows the government undue influence over the bank.
In December, Hungary's central bank governor, Andras Simor, said the bill amounted to a takeover of the central bank. Meanwhile, all three ratings agencies downgraded Hungary’s credit rating to junk status at the start of this year, partly in response to the law. Last month the European Parliament voted to withhold 500 million euros in economic development aid if Hungary did not meet deficit reduction targets this year in order to bring its budget deficit down to 2.5 percent of gross domestic product.
However Zoltán Csefalvay, Hungary’s minister of state for national economy,
“I think its really good progress because if you look back to January then the European Commission raised six points, according to the new law around the central bank and we had to settle four of those points, and yesterday we submitted these corrections to the parliament. So I think it’s really good progress that the points that we have already settled be pushed towards the parliament to change the law,” Csefalvay said.
He added that while there were still some points to settle between the Hungarian government and the IMF and EU, he believes the negotiation are now on the “right track.”
“I think it has opened the way to the formal part of the negotiations and we are interested in starting the formal part of the negotiations with the IMF and European Commission as soon as possible,” he added.
Csefalvay also said Hungary remained open to foreign investment, telling CNBC that the country saw $1.2 billion in foreign direct investment in 2011. He said that the government had carried out a “huge range of reforms,” particularly in the labor market, which would help to ensure the country will continue to offer worthwhile investment opportunities.