Central bank: Hungary debt hits 16-yr high

Struggling Hungary, looking for EU and IMF help, has seen its total public debt hit is highest level since 1995 due to the sharp fall of the forint against the euro, official data showed Monday. According to the central bank, Hungary's accumulated public debt stood at 82.6 percent of gross domestic product (GDP), or 22.9 trillion forints (72 billion euros, $94 billion) at the end of September, up 76.7 percent at end-June. Half of the public debt is in foreign currencies, making the problem even worse as the forint has fallen sharply -- more than 20 percent -- against the euro since October, analysts say. Hungary's centre-right government of Prime Minister Viktor Orban has been engaged in a "war against public debt" since taking office in May 2010. By the effective nationalisation of some 11 billion euros in assets held by Hungary's private pension funds, the government had managed to improve the picture by end-June. Orban has pledged to trim the debt to less than 70 percent in 2012 and to the EU ceiling of 60 percent by 2014. "The statements of the central bank are not prepared on a professional basis and do not the least serve the interests of the country," commented a government spokeswoman. Gabriella Selmeczi said "the government obtained serious results last year" in its policies. Hungary was forced to seek a 15-20 billion euros credit line from the International Monetary Fund (IMF) and the European Union (EU) in November after it had difficulties borrowing on the bond market and its currency fell sharply. However, EU and IMF officials quit preliminary talks in December amid uproar over the government's proposed reforms -- since adopted in parliament -- of the central bank which critics say undercut its independence. Hungary's Minister without Portfolio Tamas Fellegi will meet IMF head Christine Lagarde on January 11 in Washington for informal talks on the country's request for aid, his office said Monday. Hungary can ill-afford to anger its international partners, which bailed it out in 2008 to the tune of 20 billion euros at the height of the global financial crisis. Hungary's debt is now ranked below investment grade at two of the three main credit rating agencies who have cited the changes made on the central bank and other government measures.