HUNGARIAN PREMIER Viktor Orban has sought to defuse tension between his government and the European Union, International Monetary Fund and his country’s own central bank, amid sharp criticism from the United States and a debt downgrade by a major ratings agency.
Mr Orban has been accused of mounting a dangerous power-grab through a new constitution that removes checks and balances on his rule and gives him effective control over key institutions that formerly were independent.
The government says it is legitimately using its two-thirds majority in parliament to remove the last vestiges of the communist system and make Hungary more modern, democratic and robust.
Budapest is seeking “precautionary” aid from the EU and IMF to reassure markets that it can service its debts, but officials from both organisations have refused to discuss funding until Mr Orban guarantees the independence of Hungary’s central bank – which he has clashed with many times and accused of failing to support his controversial economic policies.
“The central bank Act itself declared the independence of the institution,” Mr Orban said yesterday, adding that its chief, Andras Simor, “can count on the government’s support, including our backing for him personally”.
Mr Orban said that on Hungary’s new central bank law, his conservative government had “adopted 13½ of 15 recommendations by the European Central Bank, which could easily be a European record, and we continue to be co-operative”.
He denied his officials planned to prop up the economy by taking funds from the central bank’s reserves, and stressed that the government and central bank were in agreement that the signing of an IMF deal “as soon as possible is in the interests of the economy”.
Hungary’s forint currency strengthened somewhat yesterday after a run of heavy losses, but that news was tempered by an announcement from ratings agency Fitch that it had downgraded the country’s credit status to “junk” – following on the heels of the other two ratings firms.
Eleni Tsakopoulos Kounalakis, the US ambassador to Budapest, yesterday denied media reports that Washington wanted to see Mr Orban replaced.
But she did say the US was “very disappointed” that he ignored its concerns over the new constitution.