Budapest  Hungary pledged to seek a fast agreement on financial aid with the International Monetary Fund (IMF) and the European Union (EU), which on Wednesday warned that the country failed to resolves disputes that block the start of talks.

The government has "no A and B plan" on an IMF deal, Tamas Fellegi, minister in charge of aid negotiations said at a conference in Budapest yesterday, seeking to alleviate investor concern that Hungary is playing for time or abandoned its plan to reach an agreement. Prime Minister Viktor Orban's Cabinet, which asked for financial assistance in November, is embroiled in a legal dispute with the EU.

Court order

The European Commission, the 27-nation bloc's executive, on Wednesday moved toward seeking a court order to require Hungary to redraft laws on the judiciary and data protection agency, sending the forint and stocks tumbling.

"The government is aware of the risks and it's seeking an optimal solution and an IMF deal is unarguably part of this," Fellegi said, adding that Hungary is committed to market financing. "We're ready to start talks as early as today."

The forint gained 0.8 per cent to 293.99 per euro at 10.30am in Budapest. The currency dropped 2.6 per cent in five days as investors including BlackRock, Citigroup and Royal Bank of Scotland speculated that the government may balk at compromising to obtain a loan.

The benchmark BUX stock index snapped a three-day slide to gain 0.8 per cent to 18,653.08, led by mortgage lender Foldhitel es Jelzalogbank Nyrt, which advanced 3.4 per cent.

‘Contentious issues'

The "contentious issues" between the EU and Hungary are of political and not economic in nature, Fellegi said, adding that these "complicated political problems" need to be solved before negotiations can start.

The government will "promptly" submit the necessary legal amendments and is awaiting a letter from EU Economic and Monetary Commissioner Olli Rehn on the trading bloc's concerns regarding central bank independence as well as concrete preconditions to the start of negotiations, Fellegi said.

The commission yesterday gave Hungary one month instead of the usual two to rewrite the laws or prove that they are in line with EU standards after the government's previous response, submitted on February 17, failed to resolve the concerns.