July 13th, 2012
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Hungary to start talks with IMF on stand-by agreement on Tuesday

The IMF will start talks with Hungary on Tuesday next week on a stand-by agreement (SBA), the fund’s director of external relations, Gerry Rice, told a press briefing on Thursday.

The IMF is aware that the Hungarian government wants to treat the SBA as precautionary, Rice said.

A delegation of the IMF and the European Union will arrive in Budapest on July 17 to start talks with Hungary, the European Commission said last Friday, after Hungarian parliament passed modifications to its central bank law.

The IMF loan is needed to improve Hungary’s position rather than for survival, Prime Minister Viktor Orban said earlier.

Hungary’s chief negotiator at the talks, Mihaly Varga, has said the planned financial aid will be around the 15 billion euros expected by markets and the deal could be sealed by October. He added that Hungary needs a safety net rather than an immediate transfer of funds.

A “precautionary” deal in IMF and EU terminology refers to the way credit is used rather than to a type of loan. More precisely, the recipient country has a credit line on stand-by but will not draw on it.

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