Hungary

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.

European finance ministers agreed to suspend European Union funds destined for Hungary because of its failure to hit budget targets while, under pressure from other euro-zone governments, Spain agreed to deeper budget cuts than it had planned for this year, The Wall Street Journal reported. The two developments on Tuesday are signs of how the tougher policing of government budgets introduced since the onset of the sovereign-debt crisis is likely to generate tensions within the EU.

The European Commission proposed Wednesday to suspend €495 million ($602.2 million) in European Union budget funds for Hungary in 2013 unless it acts quickly to cut its deficit, The Wall Street Journal reported. Hungary's government found the suspension proposal unfounded, unfair and legally disputable, saying it has already taken prudent steps, while an economy ministry official said there was no "practical chance" that the funds would be suspended.

The collapse of Hungary’s national airline, Malev, will likely make such a big hole in the country’s budget it has attracted the inquiring eye of the International Monetary Fund, The Wall Street Journal Emerging Europe blog reported. State-owned Malev terminated its operations last week under the weight of crippling debt. Although it hasn’t formally gone bankrupt, it has already announced that it will dismiss its staff, and has returned the leased aircraft in its fleet.

The liquidation of Hungary's national airline Malev would cost the state HUF1 trillion ($4.6 billion) under the provision of a contract, government commissioner Gyula Budai said Wednesday, Dow Jones DBR Small Cap reported. The sum is payable under a provision of a contract signed back in 2007 between the Hungarian government and the owner of the Budapest Liszt Ferenc Airport, Germany's Hochtief AG, Budai said.

Hungary’s national airline, Malev, has ceased operations in the latest development to shake the country’s ailing economy and pile pressure on prime minister Viktor Orban, the Irish Times reported. Malev abruptly announced yesterday morning that it was grounding all flights, amid fears that its aircraft could be impounded abroad after they were not allowed to take off from Dublin and Tel Aviv airports.

Hungary's government Thursday appointed a controller to monitor finances at troubled national airline Malev after the state-owned company went into bankruptcy protection at the beginning of the week, Dow Jones DBR Small Cap reported. The airline has amassed a debt of HUF60 billion ($271.7 million), and has to repay the government HUF100 billion of state aid after it was found in breach of European Union rules.

The Hungarian government decreed Monday that troubled national airline Malev Zrt was a company of "strategic importance" in a move to shield the state-owned company from bankruptcy, Dow Jones DBR Small Cap reported. The government's move came as the airline's chief executive, Lorant Limburger, said in a statement that Malev lacked the funds to continue operating beyond the end of January. Malev held an emergency board meeting earlier Monday.

Hungary's prime minister moved to soothe anxious markets Friday, meeting with the central bank governor and showing a new willingness to discuss changes to a controversial law curbing the bank's independence that has become a stumbling block to international financial help, The Wall Street Journal reported.

A selloff in Hungarian financial markets is forcing investors to weigh the possibility of a default in the European Union state and the risk of contagion to other regional economies, Reuters reported. The rising cost of insuring government and bank debt in neighbouring euro zone member Austria because of exposure to Hungary is a case in point.