Hungary PM sees at least one more 2011 forex bond issue

Published 03/28/2011, 05:04 PM
Updated 03/28/2011, 05:08 PM

* Hungary has regained financial independence-PM Orban

* Budget "under control" despite surge in deficit

* New constitution to contain clause on forint -PM

BUDAPEST, March 29 (Reuters) - Hungary plans at least one more foreign currency bond issue this year after the sale of dollar-denominated bonds last week, Prime Minister Viktor Orban told state television M1 on Monday.

The country placed a 10-year dollar bond worth $3 billion and a further $750 million in a 30-year bond last week amid optimism over its fiscal reforms despite a shaky global market environment. [ID:nLDE72N133]

Orban said the foreign bond issues help refinance expiring debt and demonstrate the economic independence of the country.

His centre-right government, which came to power last year, stunned markets when it decided not to apply for a new credit deal with the International Monetary Fund and the European Union. An earlier deal with the IMF and the EU helped the indebted country survive the 2008-2009 global crisis.

"We have regained our financial independence," Orban told television.

The proceeds of the dollar bonds will cover more than half of Hungary's 4 billion euro ($5.64 billion) foreign currency debt refinancing need this year.

When asked whether Hungary will have more foreign currency bond issues this year, Orban said: "There will be at least one more."

Orban said the budget deficit overshot the target last year due to a weak fiscal performance of local municipalities, which underpinned the need for a new law to regulate the financing of local governments.

One-off budget revenues in the second half of 2011 will ensure that fiscal trends remain on the right course this year despite a surge in the budget deficit to over 80 percent of the full-year target by February, he added.

"Things are under control," he said.

The prime minister also said that talks with banks about lifting a government-imposed moratorium on evictions by July were advancing well and would be hopefully concluded in May.

FORINT ENSHRINED IN CONSTITUTION

He said his government planned to include a clause about the forint in the new constitution, which the ruling Fidesz party wants to pass in parliament in April, because "Hungary arranges its economic deals in the forint, and the forint must be defended."

When asked what would happen in the future when the country will adopt the euro to meet its European Union obligations, he said: "We will need to amend this rule then."

According to Hungarian laws, the constitution can be amended only with a two-thirds parliament majority. Orban's Fidesz party controls more than two-thirds of the votes in parliament, and their term will end in 2014. Hungary is seen adopting the euro only at the end of this decade.

Orban also confirmed that his government had not abandoned plans to freeze public utilities prices and was working on a scheme to keep the price of district heating used by hundreds of thousands of families unchanged in the long term.

(Reporting by Sandor Peto)

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