Business World

Sunday 18 March 2018

Hungary asks IMF/EU for financial help as ‘precautionary’ measure

IMF chief Christine Lagarde. Photo: Getty Images
IMF chief Christine Lagarde. Photo: Getty Images

HUNGARY has asked for precautionary financial help from the International Monetary Union and the European Union.

IMF chief Christine Lagarde confirmed the move today saying: "The IMF has received a request from the Hungarian authorities for possible financial assistance. The authorities have sent a similar request to the European Commission and indicated that they plan to treat as precautionary any IMF and EC support that could be made available."

Ms Lagarde said an IMF team currently working in Budapest would now return to Washington for consultations with the IMF management and board.

The euro zone debt crisis and Hungary's weak economic outlook coupled with the threat of a downgrade to "junk" debt status are believed to have prompted the government to make the move.

Policies pursued by Prime Minister Viktor Orban's centre-right government have made investors wary, analysts say.

Hungary's total debt had risen to 82pc of gross domestic product by September from 75pc at the end of June, recent official figures showed.

The government has levied huge taxes on various sectors to fill budget deficits and effectively nationalised €11bn in assets held by private pension funds since coming to power in April last year.

The outlook for Hungary is clouded, Standard and Poor’s and Fitch have warned and analysts predict that Hungary will have the lowest growth rate among the 10 EU newcomers with 0.5pc growth predicted in 2012.

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