This content is not available in your region

Hungary wants to sever IMF connections

Hungary wants to sever IMF connections
Text size Aa Aa

Asserting its economic sovereignty, Hungary plans to pay back an IMF loan early and wants the fund to shut its office in Budapest.

Hungary’s ability to avoid the austerity programmes forced on many of its European neighbours will be the main selling point when the government bids for re-election next year.

Central bank governor Gyorgy Matolcsy has written to IMF Managing Director Christine Lagarde to say Hungary is considering an early repayment of the money it still owes from a 2008 loan that saved the country from bankruptcy.

Relations between Prime Minister Viktor Orban’s government and the Fund have been strained since he rejected closer IMF scrutiny of his economic policies and launched unorthodox moves that included Europe’s highest bank tax and so-called “crisis taxes” on business, which have see international investment fall..

By issuing the country’s first international bond since 2011 in February, Orban demonstrated he could go it alone by borrowing on global financial markets.

Matolcsy, who is Orban’s former economy minister, said he would initiate closure of the IMF’s resident representative office in Budapest, saying it was “not necessary to maintain it” any longer.

IMF spokeswoman Angela Gaviria responded that the mandate its representative in Budapest, Iryna Ivaschenko, will expire in late August and the Fund will not seek to replace her since it is present in member countries at the invitation of a country’s authorities.