Budapest: Hungary has asked International Monetary Fund to leave the country and close its office in Budapest as after taking bailout loan country took from IMF.
The head of Hungary’s Central Bank Gyorgy Matolcsy wrote a letter to IMF Managing Director Christine Lagarde on Monday asking for it to close its representative office in Budapest as it was “not necessary to maintain” it any longer. In response, the IMF says it is ready to agree since the current IMF representative in Hungary is due to leave soon anyway.
Eastern European economy experts say that since Hungary is heading for a general election next year, many see the move as an attempt to show the government’s ability to avoid austerity programs and to act without outside help.
In 2008, amid the global crisis Hungary was saved from bankruptcy with a $26 billion rescue package from the IMF and the EU. Two years later Prime Minister Viktor Orban’s government decided not to renew the deal to avoid closer IMF scrutiny of its economic policies.
In February 2013 Prime Minister Orban issued the country’s first international bond since 2011, thus demonstrating the country could go it alone by borrowing on global financial markets.
Relations between Orban’s government and the IMF have always been strained. In 2010, when Orban came to power, his government issued new laws, which were criticized as curtailing democracy, the justice system and freedom of speech. The European Parliament responded with a resolution calling on Hungary to repeal the “anti-democratic changes.”
Hungary still owes $2.125 billion to the IMF from its original credit line of $25.5 billion.
