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Hungary ready to modify parts of central bank law

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Hungary ready to modify parts of central bank law

Viktor Orban - Photo EU Council

(BUDAPEST) - Hungary, seeking aid from the International Monetary Fund and European Union, is ready to meet some of their criticisms over its central bank reforms, Prime Minister Viktor Orban said Friday.

"Concerning the points made ... over the new law on the central bank, the Hungarian government agrees with some of them and I see no obstacle to adopting them," Orban told MR1 radio.

"However, there are other points where our positions are still far apart," he added.

On Thursday, European Commission head Jose Manuel Barroso said he would do everything to get Hungary to abide by EU laws after the country adopted a new constitution which critics say undermines the independence of key state institutions, rigs the electoral system and curbs press freedoms.

The EU and IMF have attacked the central bank reforms as compromising its independence, giving the government undue influence over monetary policy.

"We'll use all our powers to make sure that Hungary complies with the rules of the EU," Barroso said in Denmark, while noting some signs that Budapest was ready to discuss the most contentious points.

Barroso's comments came a day after the Commission threatened to drag Budapest to court unless it amended the central bank legislation.

Ensuring the central bank's independence is a condition if Hungary is to be able to conclude talks with the EU and IMF on a credit line of up to 20 billion euros ($25 billion) to stabilise its struggling economy.

At talks Thursday in Washington, the IMF said that in return for aid Hungary would have to demonstrate its commitment to address the issues.

IMF head Christine Lagarde said in a statement that before full talks can begin, the IMF "will need to see tangible steps that show the authorities' strong commitment to engage on all the policy issues that are relevant to macroeconomic stability.

"Support of the European authorities and institutions would also be critical for successful discussions of a new programme."

Hungarian senior minister Tamas Fellegi said after meeting Lagarde that Budapest fully understood that it "needs to follow policies that will strengthen the confidence of the markets in the Hungarian economy and the Hungarian institutions.

"The Hungarian government is open and ready to discuss ... any concerns that our negotiating partners might have. We need concrete suggestions and not political statements," he added.

The EU and IMF broke off talks with Budapest last month as the dispute escalated, threatening to leave Hungary to its own devices despite concerns over the exposure of EU members such as Austria to the country.

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