BUDAPEST, June 23 (Reuters) - Followings are key comments from Hungarian Deputy Prime Minister Tibor Navracsics in an interview to Reuters on Wednesday.
(For story on the interview, click on [ID:nN23560945])
Question: Will Hungary seek to extend the (loan) agreement? Answer: “Yes.”
“Of course we want to achieve conditions (at the talks), which on the one hand would continue to ensure that the Hungarian budget and Hungarian public sector can be funded, and on the other hand ... we can make them accept our objectives which would allow Hungary to join the recovery in Europe, when it starts, as fast as possible.”
“For that we need structural changes... When we talk with the IMF, the EU, we will try to bring in these factors and reach an agreement ... which would give us room of manoeuvre in this field. Certainly for that we also need to put down a roadmap for the IMF and the EU which allows them to see the direction of the changes launched and also makes the timetable more calculable.”
....we concentrate with all our nerves on meeting the 3.8 percent (full-year target).
“Obviously, during the planning of next year’s budget we will have to reckon with whether we can meet (the 3 percent 2010 target). We hope we can meet this undertaking by the (previous) Bajnai government, which would bring the budget deficit below 3 percent. But of course we have already seen that even some of the officials of the previous government admit and think tanks also believe that even the 3.8 percent (target) will be very-very hard to meet, and (we have seen) that the international conditions have become more unfavourable than what was calculated when the budget was planned.”
Question: Is it possible that Hungary will try to negotiate a higher deficit for 2011?
“We will see, that will hinge on what international situation we will face at the end of the year.”
Question: Will the date of euro entry be part of the talks with the IMF and the EU in the autumn?
“This must be there... even though the debates around the euro accession date are only partly driven by that our (economic) indicators are worse (than needed for euro entry), but also because several of the countries which want to join the euro zone have got uncertain whether this is the good moment to join... Nevertheless, I think, no European Union member state outside the euro zone can write up an economic policy plan, which does not have at least an approximate date regarding euro adoption.”
Question: Any indication about Hungary’s euro entry date, even as a range?
“Much has been said (about that), if I remember well the consensus was somewhere around 2014-2015 based on the earlier comments. If we can meet what the earlier government have undertaken, (those dates are) not out of the question, even though, as I said the international environment has significantly deteriorated since then.”
“Even if we were planning (to change the central bank law), it can be done only along the line that (the bank‘s) independence is not hurt. Otherwise, changing the central bank law is not on the agenda now.”
“I think the central bank governor and the central bank management should take into account that the 8 million forint (monthly) salary (of Governor Andras Simor) counts very high in Hungary today... I think if there are conflicts, as I have said before, we need to sit down, talk and negotiate. Of primary importance to me would be that the government and the central bank discuss their monetary policy goals and the path leading to those goals.”
“When the prime minister feels it timely to talk with the central bank governor, he will certainly contact him.”
ABOUT GOVERNOR SIMOR‘S INVESTMENTS
“He (Simor) somehow once forgot to include incomes from his company in his declaration of wealth. He became central bank governor and did not disclose part of his holdings in companies to the public. This is a problem, which, I don’t think that there are too many countries in Europe in which this problem would be neglected without a word. This obviously has a bearing on differences on professional policy but in this case also I think there is no other way than to talk and clarify this situation somehow.”
Question: Does Simor have to step down?
“I would say that (we) have to sit down and talk this (private investments) over. I would be curious to know Andras Simor’s answer, I have heard only one explanation from him, that he forgot to write that in. This, you know, is a thin explanation.”
“We have been continuously saying for about two years that lower interest rates would be the best for companies regarding their access to credits, but of course we accept the Monetary Council’s decisions in every actual case.”
“When we have an exchange rate policy, two interests must be reconciliated: one is the Hungarian economy’s interest, and the other one is the interest of Hungarian households as there are many foreign currency debt holders in the country, therefore the forint exchange rate is, apart from being an economic issue, is also a social policy issue.”
Reporting by Sandor Peto/Gergely Szakacs