Strauss-Kahn, speaking in an interview with daily Népszabadság on Tuesday, said that contrary to some market rumors, he is not visiting Budapest on Tuesday to scold the government for its progress since gaining IMF’s help in November.

But he added that Hungary’s external financing ability will remain poor so it would be a mistake for the government to feel self-satisfied. He added that the IMF facility, which expires just before general elections due in the spring of 2010, may be extended if the next government needs the facility and its policies are in line with the IMF’s requirements.

Hungary’s program agreed on with the IMF last year is on track but the country still must make efforts to fend off the impact of the global slowdown, Strauss-Kahn said after meeting with central bank governor András Simor on Tuesday. “The program we established with Hungary is on track and the reason why I came here was to see.... how it goes but I’m rather satisfied with the way it’s going”, he said.

The global economic situation is worsening and new forecasts to be released shortly from the International Monetary Fund will not be optimistic on the outlook, Strauss-Kahn added. “We’re going to release new forecasts in a few days and they’re not optimistic, and the situation all over eastern Europe is bad one not only in Hungary,” Strauss-Kahn told Reuters.

Hungary resorted to the IMF facility after the global financial crisis threatened it with financial collapse, sent the forint to an all-time low versus the euro and forced the central bank to raise interest rates by 300 basis points in an emergency move.

Since gaining the IMF’s help, the government pushed through a budget that cuts back state expenditure, lowers the budget deficit and parliament-approved laws to limit future budget spending and provide financial support to the banking system. (Reuters, MTI)