The IMF agreed to contribute 12.5 billion euros (15.7 billion dollars) to the biggest international rescue package for an emerging market economy in the current crisis and the first one to be granted to an EU member state, the EU is ready to lend 6.5 million euros (8.1 billion dollars) in bonds and the World Bank will chip in with one billion euros (1.3 billion dollars) to guarantee foreign capital liquidity in Hungary.
“This is not another credit to add to Hungary’s state debt but cheaper credit to replace the existing loan constructions,” Hungarian Prime Minister Ferenc Gyurcsány noted at a five-party consultation in parliament on Tuesday, prior to the announcement.
A total amount twice the size as previously expected, the joint help comes under a 17-month stand-by agreement. A stand-by agreement provides credit that does not necessarily have to be used.
“The reason for the size of the loan is to restore confidence in Hungarian markets,” said Anne-Marie Gulde of IMF.
Hungary has been one of the hardest hit among the EU Member States due to investors’ concerns over the country’s high debt level, the high level of foreign currency borrowing by its citizens and the gaping budget deficit.
Vocabulary:
- bailout – mentőöv, segítség
- financing package – pénzügyi csomag
- billion – milliárd
- to bolster the economy – támogatást nyújt a gazdaság számára
- battered by – megviseli vmi
- rescue package – mentőcsomag
- emerging market – feltörekvő piac
- bond – állampapír
- state debt – államadóság
- stand-by – készenléti
- to restore confidence – bizalom helyreállítása
- high debt level – nagy adóság
- budget deficit – költségvetési hiány
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