Today, the EC formally announced its proposal to provide financial assistance “to Hungary in support of its balance of payments.” The proposal is in line with the EU’s pledge to provide Hungary aid in conjunction with the €12.5 billion loan package the IMF granted Hungary earlier this week.
Under the proposal, which still remains subject to approval of the Economic and Financial Affairs Council (ECOFIN), “Hungary will benefit of a medium-term loan amounting to a maximum of €6.5 billion, with a maximum average maturity of five years. The loan will be made available in a maximum of five installments in the context of EU surveillance.”
Mr. Joaquin Alumnia, Commissioner of European Economic and Monetary Affairs, stated that it was the EU’s hope that Hungary, “sticks to its plan to accelerate the deficit reduction, to strengthen banking regulation and supervision and to take structural measures to support employment.”
The EC also proposed to increase the present ceiling of the facility set in place in to provide “medium-term financial assistance for Member States that experience difficulties with balances of payments,” pursuant to Council Regulation 332/2002, from €12 billion to €25 billion.
In separate announcements, the EC authorized the previously announced French debt-restructuring scheme and Dutch guarantee scheme announced earlier this month. In reaching its conclusion, the EC stated that the schemes “were compatible with EU state aid principles…[and] an appropriate means of restoring confidence on the financial markets.”