THE EUROPEAN Union and International Monetary Fund will not resume talks with Hungary on financial aid until Budapest guarantees the independence of its central bank, Brussels has said.
The EU issued the warning to Hungarian prime minister Viktor Orban a day after some 100,000 people rallied in Budapest to denounce a raft of laws they say concentrates a dangerous amount of power in the hands of his conservative government and its allies.
“Because of the lack of certainty of the legal environment around the central bank, which is very important to ensure the financial stability of the country, the IMF and the [European] Commission have not decided yet to come back to Budapest,” EU spokesman Olivier Bailly said yesterday.
A new constitution drawn up by Mr Orban’s Fidesz party came into force on January 1st, and enshrines sweeping changes to the way media, religion, the judiciary, elections and the central bank are controlled in Hungary.
Since taking power in 2010, Mr Orban has used a two-thirds majority in parliament to place loyalists at the head of almost all major national institutions, prompting the EU to raise concerns. Mr Orban’s bid to reinvigorate the economy without more EU and IMF help has not succeeded, sending the forint currency into a tailspin and pushing borrowing costs to unsustainable levels.
He now wants to establish a “precautionary” deal with the EU and IMF to reassure markets about Hungary’s stability.