Hungary’s central bank governor Gyorgy Matolcsy said Monday the country will soon repay a 2008 loan from the International Monetary Fund, and that the organisation should close its Budapest office.
About 2.2. billion euros remain outstanding from a 20 billion euro ($25 billion) loan Hungary took from the IMF, the EU and the World Bank in late 2008 after it was frozen out of the bond market at the height of the global financial crisis.
In a letter to IMF Managing Director Christine Lagarde and posted on the central bank’s website, Matolcsy, a loyal ally of Prime Minister Viktor Orban, proposed the closure of the office — opened in 2009 — saying Hungary expects to pay back the loan ahead of schedule in 2014.
“Considering that (the repayments are) almost complete, we have come to the conclusion that it is not necessary to maintain the Fund’s Resident Representative Office in Budapest,” the letter read.
“We appreciate the valuable support of the Fund in times when Hungary was hit by the crisis and the financing of its public debt… became questionable,” it continued.
The IMF’s Budapest office said in a statement that Lagarde had received Matolcsy’s letter, and that the Fund’s resident representative for Hungary, Iryna Ivaschenko, would not be replaced at the end of her term in August.
But it said the IMF would maintain regular bilateral consultations with Hungarian authorities.
Hungary has had a fractious relationship with the IMF since Orban’s right-wing government came to power in 2010.
Long-running talks begun in 2011 between Budapest and the IMF on a second loan — a 15 billion euro credit line — ended early in 2013 after consistent disagreement on issues including the nature of the loan and economic policy.
Last year the government ran an advertising campaign criticising the IMF for “interference” in Hungarian policy-making.
Business website Portfolio.hu commented that Monday’s announcement was a message from the government that it considers its affairs with the IMF as closed.
“This can be used in the government’s campaign communication as the elections (due in early 2014) approach,” the website said.
The Fund operates offices in 84 countries worldwide, including three of Hungary’s neighbours, Serbia, Romania and Ukraine.
In April the IMF closed its office in Latvia after it said the Baltic country had paid back in 2012 a loan taken out in 2008.
Hungary proposes closure of Budapest IMF office
