IMF provides 15.7-billion-dollar rescue package to Hungary
Hungary has received a commitment from the International Monetary Fund (IMF) to provide as much as 12.5 billion euros (15.7 billion dollars) in loans to the Eastern European country as it seeks to weather the global financial crisis, dpa reported.
The IMF and Hungary made the agreement Tuesday after Hungarian stocks and the forint have plunged, its economy slows and the government runs a growing budget deficit.
"The Hungarian authorities have developed a comprehensive policy package that will bolster the economy's near-term stability and improve its long-term growth potential," IMF Managing Director Dominique Strauss-Kahn said in a statement. "At the same time, it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets."
Investors around the globe are fleeing developing countries as they seek investments that are seen as less risky amid the global financial crisis, prompting developing countries to seek help from the IMF. The lending institution also has agreed to provide emergency funding to Iceland and Ukraine and has received requests for help from Pakistan and Belarus.
The IMF said the European Union is also prepared to provide a 6.5-billion-euro loan to Hungary and the World Bank of 1 billion euros.
The IMF's board was expected to approve the Hungarian package early next month.
The Washington-based fund said it includes measures to secure adequate liquidity and strong amounts of capital for the banking system and reduce government debt.
"We will continue assisting the Hungarian authorities on how to adapt to the current global financial turmoil and to catalyze financing as needed," Strauss-Kahn said.