IMF and EU in town to keep Hungary on the straight and narrow

IMF and EU in town to keep Hungary on the straight and narrow Budapest  - Delegations from the International Monetary Fund (IMF) and the European Union arrived in Budapest Wednesday to ensure Hungary is meeting commitments to strict financial housekeeping that were a condition for a huge rescue loan package last year.

The IMF, EU and the World Bank offered Hungary a 25 billion-dollar credit line last October as its economy teetered on the brink of collapse.

Among the commitments Hungary undertook in exchange for the money was that it would bring its budget deficit down to 2.6 per cent of gross domestic product by the end of the year, and that it would not reduce its overall income from taxes.

Last week, socialist Prime Minister Ferenc Gyurcsany announced plans for major tax restructuring in a bid to breathe life into Hungary's ailing economy.

Spokesman for the centre-right opposition Fidesz party, Peter Szijjarto, sought to cast the scheduled visit by the IMF and EU delegations in an ominous light.

"We don't know exactly whether the IMF wants to force Hungary into further austerity measures, or whether the government wants to impose brutal austerity measures (of its own)," he said.

The managing director of the IMF, Dominique Strauss-Kahn, travelled to Hungary in person in mid-January for talks with Gyurcsany, Finance Minister Janos Veres and the central bank governor Andras Simor.

The IMF and EU delegations aim to complete their reviews by mid- February, finance ministry spokesman Ferenc Pichler told reporters. (dpa)

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