Today, the IMF announced that it would provide Hungary with a €12.5 billion loan under a 17-month stand-by arrangement. Hungary will also receive a €6.5 billion loan package from the EU and a €1.0 billion loan package from the World Bank. Earlier this week, the IMF had confirmed that it was meeting with Hungarian authorities and representatives from the EU to discuss the terms of a financial assistance package to help stabilize the Hungarian economy in light the present financial crisis.
Mr. Dominique Strauss-Kahn in his statement today acknowledged that the IMF package “includes measures to maintain adequate domestic and foreign currency liquidity, as well as strong levels of capital, for the banking system. Important measures in the fiscal area will reduce government-financing needs and ensure longer-term debt sustainability.” He further noted that “[t]hese strong policies justify the exceptional level of access to Fund resources – equivalent to around 1,020 percent of Hungary’s quota in the IMF – and deserve the support of the international community.” The agreement still remains subject to approval by the IMF’s Management and its Executive Board pursuant to the Fund’s current expedited procedures.
Earlier this month as previously reported, the European Central Bank also extended a €5 billion credit line to Magyar Nemzeti Bank, the Hungarian central bank, with the aim of improving liquidity in the Hungarian foreign exchange swap market.