Hungary seeks anticipatory bailout

Hungary is planning to ask the International Monetary fund and the European Union for a “precautionary” two-year rescue package worth 10-20 billion euros as it continues to try to control its finances.

Hungary is planning to ask the International Monetary fund (IMF) and the European Union (EU) for a “precautionary” two-year rescue package worth 10-20 billion euros (Rs 58,600 crore to Rs 1,17,200 crore) as it continues to try to control its finances.

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Economy minister Gyorgy Matolcsy said on Friday that Hungary believes it needs to arrange a new credit line from the IMF and the EU in case the European economic situation deteriorates.

Matolcsy said Hungary will seek agreement to run a larger deficit than planned next year.

Under its current plan agreed with the IMF, Hungary is committed to keeping its annual budget deficit to 3.8 per cent in 2010, and then below 3 per cent in 2011.

Matolcsy now suggests that next year’s target may need to be relaxed. “I think we should agree with our partners on a range of between 3 and 3.8 per cent (for 2011), undertaking very deep serious structural reforms,” he said.