An external safety net of about €5 billion, covering next year’s external public debt redemptions, would “markedly increase” Hungary’s ability to refinance itself on the market at relatively low cost, London-based emerging markets analysts said on Monday.

In a comprehensive report on emerging markets outlook, BNP Paribas said that while any conditionality attached to the financial help expected from the IMF “would displease” the government, “we think ultimately the deal, in whatever form, will be signed in H1 2012”.

In a recent, separate report, emerging markets economists at Morgan Stanley in London also said that a precautionary line of €5-10 billion from the IMF and the EU would be sufficient to reassure markets.

In its new research, BNP Paribas said “the contraction in GDP” and a still high risk premium “will leave Hungary little choice other than to accept an IMF proposal”.

A forecast chart in the report suggests that BNP Paribas sees Hungary’s GDP drop 0.9% next year after a 1.3% growth in 2011. In 2013, the bank expects the Hungarian economy to return to growth, with a projected 2.1% GDP rise.