Hungary to get $25 bln rescue packages from IMF

Hungary's Prime Minister Ferenc Gyurcsany (L) talks
with Finance Minister Janos Veres during a meeting
with leaders of parliamentary parties in Budapest October 28, 2008.
The European Union is preparing a financial aid plan for Hungary,
the EU state hardest hit by the global economic crisis,
the EU's executive said on Tuesday.
REUTERS/Laszlo Balogh (HUNGARY)
The IMF said it had reached an agreement with Hungary for a $15.7 billion (12.5 billion euro) loan deal, while the European Union stood ready with an additional $8.1 billion in financing and the World Bank another $1.3 billion.

The European Union is ready to provide 6.5 billion euro in funds and the World Bank has agreed to provide 1 billion euros, the IMF said. The loan is a 17-month stand-by agreement, which will be approved by the Fund's executive board next month, the statement said. A stand-by agreement is a line of credit that doesn't necessarily need to be used.

The IMF's portion falls under a 17-month stand-by loan arrangement and could be approved by the IMF board in early November.

"The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," IMF Managing Director Dominique Strauss-Kahn said in a statement.

It is the biggest international rescue package for an emerging market economy since the start of the current global crisis and is the first for an EU-member country. Last week the IMF approved a $2.1 billion deal for Iceland and a $16.5 billion program for Ukraine.

Hungarian assets have been ravaged as foreign-currency borrowing by local companies and consumers, along with slower growth, a wider budget deficit and higher government debt than elsewhere in east Europe, raised concern that the country may have difficulties in securing funding.

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Sources :

1. Bloomberg: Hungary Secures 12.5 Billion Euro IMF Rescue Package (Update2), October 28, 2008 21:10 EDT
2. Telegraph.co.uk: Financial crisis: IMF agrees to $25.1bn rescue deal for Hungary, October 29, 2008 05:56 AM GMT
3. The New York Times: A $25 Billion Rescue for Hungary, October 29, 2008
4. International Herald Tribune: Hungary to get $25.1 billion in aid, October 29, 2008

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