The Hungarian government is expected to propose changes to its central banking legislation in the coming weeks, in order to secure a credit line from the EU and the International Monetary Fund (IMF). 

The changes will be a response to the European Commission’s legal challenge to Hungary’s new legislation. The Commission claims that the law restricts the independence of the central bank, and must be revised before Hungary is allowed to start negotiations on a credit facility.

On 17 January, the Commission gave the Hungarian government one month to modify or rescind new legislation, which also imposed a new retirement age on judges and altered the status of the data-protection supervisor. The Commission said that the laws infringed the bodies’ independence and contravened EU law.

Tamás Fellegi, the Hungarian minister responsible for negotiations with international organisations, said at a press conference in Brussels on 20 January that the Hungarian government “endeavoured to achieve the earliest possible agreement” required for starting official negotiations with the EU and the IMF.

Viktor Orbán, Hungary’s prime minister, met José Manuel Barroso, the president of the European Commission, in Brussels on Tuesday (24 January) to discuss problems with the three laws. Barroso said after the meeting that Orbán had “indicated Hungary’s readiness to address swiftly the issues raised by the Commission”.

Development funds at risk

EU governments ratcheted up pressure on the Hungarian government to address its economic problems on 24 January when finance ministers backed the Commission in warning Hungary that it needed to take further action to reduce its public deficit. Hungary could lose regional development funds equivalent to 1.7% of its gross domestic product if it does not take action.

Although the government says it does not need funds from the EU and the IMF, it is struggling to borrow money on financial markets. Its credit rating has been downgraded to junk status and the value of the forint has slumped because of concern about the government’s ability to manage the economy.

The Hungarian government has come under strong international criticism since December, when Orbán’s government passed a new constitution and a package of new laws. Opposition groups and civil-liberties campaigners argue that the laws would give Orbán’s Fidesz party a stranglehold over the country’s political and legal establishment.

Centre-left, Liberal and Green MEPs are seeking a review of whether the Hungarian government is respecting EU core values on democracy and the rule of law. They want to use a procedure in the EU’s Lisbon treaty that could lead to Hungary’s voting rights being suspended if it were found guilty of failing to respect the EU’s values.

Martin Schulz, the president of the European Parliament, met Orbán on 24 January and warned him against attacking the EU in Hungary while claiming to respect European values when talking to EU leaders. “The Europeans should take into account that he is a clever man as a party leader, but he should take into account that the European leaders are not stupid.”

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