Hungarian central bank row still unresolved

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Hungarian central bank row still unresolved

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Hungary is continuing on a collision course with Brussels over the independence of its central bank.

The European Commission wants Budapest to change a recently introduced law that Brussels says limits the bank’s independence.

The conservative government of Prime Minister Viktor Orbán has backed down on some areas, but said on Friday that further discussions are needed on two issues the Commission and the European Parliament are unhappy about — the oath of office for the central bank governor and a cap on his salary.

Deputy prime minister Tibor Navracsics said he trusted “the EU would also be willing to compromise,”
and also told national news agency MTI that Hungary was reluctant to change a public sector pay ceiling, which resulted in a 75 percent cut in the salary of central bank Governor Andras Simor.

Full independence for the central bank is a Commission pre-condition for the start of talks about vital EU/IMF financial assistance to Hungary.

Hungary said with the start of aid talks pushed back a deal with the EU and IMF could be reached at the end of May or early June.

Hungary needs the new funding deal as it has to refinance four billion euros of government bonds this year.

At the same time the European Parliament has decided to draw up a report on whether EU laws and values are respected in Hungary.