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Hungary bows to EU pressure on central bank law

18 April 2012, 18:03 CET
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(BUDAPEST) - Hungary's government said Wednesday it is altering legislation that the EU had criticised as curbing the independence of the central bank, in the latest attempt to unblock talks on financial aid.

"The Hungarian government has tabled changes to the central bank law concerning several points contested by the European Commission," the economy ministry said in a statement.

A government representative will now not take part in meetings of the central bank's rate-setting committee, which will no longer be obliged to send to the government the minutes of these talks, the ministry added.

In addition, a constitutional change has also been tabled excluding a merger of the central bank with Hungary's financial regulator, which critics had said would have further increased government control over monetary policy.

"These changes have been sent to the European Commission, which has taken note of them," the statement added.

The announcement followed talks on Monday at the European Central Bank in Frankfurt between officials from the Hungarian government, the European Commission and the ECB.

In November Hungary approached the European Union and the International Monetary Fund about a possible 15-20-billion-euro ($20-26-billion) credit line after the forint currency plunged and Hungary's borrowing costs soared.

But talks have snagged on EU objections to a raft of legislation passed by the centre-right government of Prime Minister Viktor Orban that Brussels worries increases state control on the judiciary, the media -- and the central bank.

In March the European Commission gave Hungary a month to amend the judiciary and data protection laws or face court action, saying financial aid depended on Budapest proving its commitment the EU's democratic principles.

Orban on Friday accused Brussels of "blackmail", but behind the combative rhetoric his government has moved to assuage the European Commission's concerns, submitting in late March changes to its legislation on the judiciary.


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