IMF negative on Hungary growth prospects

The IMF's economic growth forecast for Hungary in 2012 may be revised downward, according to the lender's resident representative in Hungary on Thursday.The IMF forecast real GDP growth of 0.3 percent for Hungary in 2012 in its latest country report published on Jan. 25. "We're revising these numbers probably as I speak," Iryna Ivaschenko told a group of foreign investors in Budapest on Thursday, explaining that the January estimate was based on a "slightly better eurozone outlook."The possible trimming of the 2012 forecast comes as Hungary attempts to secure a potential credit line from the IMF. Talks between the sides stalled in December when the Fund deemed unacceptable government steps to restrict the independence of the national bank."We are talking all the time (with Hungary). We have been very public on issues like the independence of the Central Bank. Now a lot depends on the government," she added. "We first need to see tangible steps that the government is ready to engage on all macro policy issues."After the economy contracted by almost 7 percent in 2009, Hungary has attempted to relaunch its economy with export-led growth and debt reduction policies.Its growth prospects, however, have slowed in tandem with weak growth in Germany, its main export market. In addition, Hungary's public indebtedness, Ivaschenko said, is one of the highest in the "entire emerging markets universe"."Nobody is against growth and employment, and the high level of debt is there, the numbers speak for themselves," Ivaschenko said."The really difficult task is how you get there, the budget mix, tax mix, and expenditure mix you choose to bring the high debt and deficit levels down. It boils down to the implementation," she added.