VIENNA (Reuters) - Hungary can fund itself without help from the International Monetary Fund although an IMF deal would reduce Budapest’s borrowing costs and provide a backstop in nervous markets, Prime Minister Viktor Orban told a newspaper.
Saddled with the region’s highest debt load, Hungary has been in dispute for months with the IMF and the European Union over conditions for starting talks on a multi-billion-euro loan, making it vulnerable to a worsening European debt crisis.
The disagreement has centered on a law that lenders say undermines the independence of Hungary’s central bank. The government will submit amendments to the law shortly, it said last week.
In an interview with Austrian paper Die Presse, Orban dismissed a suggestion that Hungary needed outside assistance.
“We are able to finance the state without IMF loans but the interest rates on bonds are very high. The question is not whether we can finance the state, the question is at what price,” he was quoted as saying.
“We are still in the financial market and don’t want to leave it.”
He said Hungary’s finances could handle such high borrowing costs this year and next.
“But if we had an agreement with the IMF the interest rates would be much lower. We don’t really need loans, but are merely getting hold of precautionary measures. Hungary does not intend to live off IMF money,” he said, but could use a buffer for “worst-case scenarios” given the turbulence on financial markets arising from the problems in Greece, Spain, Italy and elsewhere.
Reporting by Michael Shields