FRANKFURT (MNI) – The danger of contagion exists for other eastern
European countries following the breakdown in aid negotiations between
the International Monetary Fund and Hungary, Thomas Mirow, head of the
European Bank for Reconstruction and Development, said Tuesday.
But those countries can protect themselves from such effects,
dependent on the degree to which they implement fiscal and structural
reforms, Mirow told German business daily Handelsblatt.
Mirow expressed confidence that in the end Hungary and the IMF
would reach agreement. “Broken up negotiations over billions in
emergency credit for a heavily indebted country are no small thing in
such a tense phase,” he was quoted as saying.
“I think the Hungarian government with the IMF will reach a
solution in the coming weeks,” Mirow said.
Asked if he thought the row between Hungary and the IMF would bring
the crisis back to eastern Europe, Mirow emphasized the need to
distinguish among different countries. Poland, for example, is on sound
footing while countries like Bulgaria and Romania remain mired in
recession.
While Hungary was on a good path, the breakdown in negotiations
have now caused “considerable” irritation in financial markets, Mirow
underscored.
Commenting on a proposal by IMF head Dominique Strauss-Kahn to
boost the IMF’s lending capacity by USD 250 billion, Mirow conceded that
despite “astoundingly positive” developments in the real economy the
first half of this year, there remain large uncertainties surrounding
the global recovery.
“In these circumstances it is sensible and advisable for the IMF to
undertake all that is necessary to guard against a possible return of
the crisis,” he said.
–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com
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