HUNGARY’S PRIME MINISTER says he is ready to negotiate with the European Union and the IMF over their objections to his country’s new constitution – but says he wants them to deliver “not political opinion, but arguments.”The comments come a day after the European Commission issued a strong threat of legal action as early as next week unless Hungary amends some aspects of its new constitution.
The new measures were adopted last month and remove some of the usual procedural ‘checks and balances’ over the government in areas like central banking, media scrutiny and judicial appointments.
The split between Budapest and Brussels comes while the Hungarian economy continues to flounder, prompting preliminary talks with the IMF and the EU on a bailout package to help it avoid an all-out default.
Orban this morning insisted, however, that markets were “more optimistic” about Hungary and that the fundamentals of the country’s economy were “far stronger than many suggested.”
“We are ready to negotiate all the points, but what we need is not political opinion, but arguments,” Orban told a group of foreign correspondents.
“When the arguments on behalf of the European Union are convincing — that it’s better to accept and follow that line — then there is no reason not to do that.”
Orban said Thursday that Hungary needed the safety net provided by an IMF-EU deal to soothe markets, but insisted that the country would continue to finance itself from the sale of bonds to investors.
“I’m sure that after the agreement with the IMF we will be able to stay on the financial markets,” Orban said, adding that with a combination of the two “the economy can go forward toward stronger economic growth”.
“My best-case scenario is that after one month the main subject related to the Hungarian economy is not how to finance the economy but how successful the growth plan could be,” Orban said.
Orban also insisted that most of the EU’s objections about his government’s budget deficit only referred to 2010 and 2011 – making the European Commission’s opinion “rather promising” for Hungary’s future.
“They criticised only the past,” Orban said. “It’s a clear sign that we are close or we even have an agreement on the possible and wished performance of the Hungarian economy and the budget in 2012.”
Aside from its legal threats, the EU had yesterday warned that although Hungary had kept its budget deficit within 3 per cent of GDP, this was “only thanks to one-off measures worth some 10 per cent of GDP” and masked a major deterioration in the national finances.
Hungary is today being asked to pay 9.58 per cent interest for new 10-year loans – far beyond what most investors would see as ‘sustainable’.