Hungary asks IMF and EU for financial aid
Hungary has asked the International Monetary Fund (IMF) and the European Union (EU) for financial aid as its debt pile grows and its currency weakens.
Official figures show the Hungarian governmment’s total debt has risen to 82% of its output, as its currency, the forint, has weakened in the face of the European debt crisis, the BBC reports.
Hungary has said it wants “a new type of co-operation” with the IMF, which is now considering its request.
The IMF confirmed that it and the European Commission had received a request for assistance, according to the BBC.
IMF managing director Christine Lagarde said: “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 they plan to treat as precautionary any IMF and EC support that could be made available.”
Last week, Hungary’s economy ministry said in a statement: “The government has started talks with the IMF and the EU about a new agreement that, instead of austerity measures, will aid Hungary’s economic growth.”
Reuters reports that Prime Minister Viktor Orban’s government, which has pursued unconventional policies since it swept to power in April 2010, may face hard talks with lenders if it wants a deal without strict conditions attached.
The forint had firmed sharply to 303-304 versus the euro on the announcement by Friday, but gave back some of those gains to trade at 306.84 on Monday, while bond yields have soared.
Two ratings agencies have warned Hungary could lose its investment grade credit rating, at present one notch above junk status, due to its weak growth outlook and unpredictable policy track.
This article was first published on Investment Week