The IMF has announced that it will extend the deadline of its €5.2 billion credit line to Hungary by six months, to October 2010. The credit can be called in four equal payments.
“Hungary will soon sign a similar contract with the World Bank on its loan,” Finance Minister Péter Oszkó said at a press conference yesterday.
Hungary can call its €1 billion credit from the EU in three parts next year. Hungary did not plan to call any amount from the IMF in September but, at request of the IMF, called a “symbolic” €55 million. “The management of the state debt is solved for the short term,” Oszkó said, adding that “no further foreign-currency bond issue is currently planned.
“We should keep in mind that a foreign-currency dominance in Hungary’s debt structure is not favourable. We should aim for a 25-32% foreign-currency debt ratio, but opening the €20 billion credit line means Hungary has now crossed that line,” Oszkó warned.
“The government is as far as possible aiming to secure Hungary’s long-term financial stability, and that is why the present agreement to extend the duration of the available credit line was signed,” Oszkó said. “The government and the IMF agree that Hungary’s GDP will drop by 6.7% this year, and expect a further 0.9% drop in 2010,” he said.
“With its recent revision, the IMF has confirmed that it regards as feasible Hungary’s 3.9% GDP deficit target for 2009, and the 3.8% aim for 2010,” head of the IMF delegation to Hungary James Morsink said. “We informed Fidesz of the loan programme modification and they had no objections,” he added.
“The National Bank (MNB), like the IMF, sees little threat of inflation,” MNB governor András Simor said.