EU welcomes Hungary U-turn on central bank

European Commission president Jose Manuel Barroso on Tuesday welcomed Hungary's decision to change a disputed central bank law, a key obstacle in Budapest's bid to secure international financial aid.

Barroso held talks in Brussels with Hungarian Prime Minister Viktor Orban in a bid to defuse a row over controversial laws passed last year, including legislation which critics say curbed the central bank's independence.

"President Barroso welcomed the commitments made by Orban on the prompt and full implementation of the measures regarding the independence of the central bank announced by the Hungarian authorities," his spokeswoman said.

The European Commission has threatened to take Budapest to court over the law, but an EU source said Barroso would "propose to abandon" the legal procedure on Wednesday.

However, the commission will take Budapest to the European Court of Justice over a data protection law and legislation on the retirement age of judges, the source said.

In November, Hungary approached the European Union and the International Monetary Fund about a possible 15 to 20-billion-euro ($20 to 26-billion) credit line after the forint currency plunged and Hungary's borrowing costs soared.


But talks snagged on EU objections to a raft of legislation passed by Orban's centre-right government that increased state control on the judiciary, the media and the central bank.

In March the European Commission gave Hungary a month to amend the judiciary and data protection laws or face court action, saying financial aid depended on Budapest proving its commitment to the EU's democratic principles.

Last week, the Hungarian government said it would alter the central bank legislation.

Orban's spokesman issued a statement Tuesday saying that the measures would be "promptly and fully implemented by the government as this is proven by the discussion already under way in the parliament."

The prime minister told Hungarian reporters afterwards that "political disagreements with the European Union should not interfere with access to financial resources given the current European economic context."