European Commission Will Discuss Hungarian Loan Talks

The European Commission is to consider Wednesday whether to start formal talks with Hungary on a precautionary loan package, after delaying negotiations for months amid disagreements about the independence of the country's central bank and other contentious issues, The Wall Street Journal reported. After a meeting in Brussels on Tuesday with Hungarian Prime Minister Viktor Orban, the commission's president, José Manuel Barroso, said he welcomed Mr. Orban's promises of "prompt and full implementation" of changes to Hungary's new central-bank legislation. It was unclear if that would be enough to win commission approval to go ahead with talks on the loan package. The commission also wants Hungary to change laws governing its court system. Some European Union officials have sought to link loan talks to that as well, but others signaled Tuesday that negotiations could start before those issues are resolved. On Tuesday, Mr. Orban sounded an optimistic note, saying he thought the two sides had "come very close to essentially reaching a breakthrough." He said that an agreement on beginning talks could come in days or weeks. Hungary is seeking a standby loan of €15 billion to €20 billion ($20 billion to $26 billion) from the European Union and the International Monetary Fund to help keep government borrowing costs down and protect its fragile currency, the forint. The country said it doesn't intend to actually draw on the credit line. The prospect for progress pushed the Hungarian forint up more than 1% against the euro on Tuesday. Investors are keen for a loan agreement that would give the EU and IMF oversight of Hungary's often unorthodox economic policies. Read more. (Subscription required.)