The International Monetary Fund, the European Union and World Bank on Tuesday agreed to a $25.1bn economic rescue package for Hungary to bolster confidence in its economy. The IMF said it had reached an agreement with Hungary for a $15.7bn loan program, while the European Union stood ready with an additional $8.1bn in financing and the World Bank another $1.3bn. The IMF loan will be disbursed over 17 months.
It is the biggest international rescue package for an emerging market economy since the start of the current global crisis and is the first for an EU-member country. Last week the IMF approved a $2.1bn deal for Iceland and a $16.5bn programme for Ukraine.
The IMF said its board could approve the Hungary deal in early November under emergency rapid-response procedures activated earlier this month.
??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,? Dominique Strauss-Kahn, IMF managing director, said.
??At the same time it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets,? he added.
Hungary??s economy has been battered by the financial crisis because its banking system is heavily exposed to foreign financing at a time when investors are pulling back from developing economies worldwide.
Mr Strauss-Kahn said the programme should improve Hungary??s fiscal balance and safeguard its financial sector.
??Specifically, the package includes measures to maintain adequate domestic and foreign currency liquidity, as well as strong levels of capital, for the banking system,? he said.
