Hungary reported to get same IMF facility as in 2008

December 13, 2011

Talks between the Hungarian government and international organizations about a financial safety net began this Tuesday. Despite earlier government statements, Hungary is likely to get a credit facility with the same conditions as in 2008.

The initial discussion is intended for each party to clarify the others' position, which is necessary for Hungary to draft an official request for a credit facility including the government's specific commitments, news portal Index reported. The website claimed to have obtained information confirming Hungary will be approved for the same type of IMF facility as it received in 2008.

The rationale behind the choice of a standby facility (SBA) for Hungary is that the country's fiscal position and outlook rules out participation in a programme with less control and more relaxed rules. Thus, Hungary should expect quartely reviews to be resumed and obtain IMF and EU approval for a schedule specifying plans for government debt reduction.

While the article noted that staff reviews are typically not aggressive, Hungary's deteriorated economic growth outlook and recent policy moves that have drawn harsh IMF and EU criticism suggest representatives of the government may have to brace up for tough talks with the lenders.

The top officials representing Hungary are Tamás Fellegi, who has recently resigned as Development Minister but will remain part of the government and in charge of IMF talks; State Secretary in charge of fiscal policy Gyula Pleschinger, and Antal Rogán, chair of Parliament's Economic and IT Committee.



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