Reports: ÁKK, MNB to recommend early repayment of IMF loan
Last week, National Economy Minister Mihály Varga reported in an interview to MTI that the government would announce a decision on early repayment of the remaining outstanding amount on the International Monetary Fund (IMF) loan in 2008. On the weekend, daily newspaper Magyar Nemzet advanced the story a bit, with their sources in government stating that such a repayment is certainly possible and that the resources are in place to make such a move before the March 2014 due date.
Varga stated then that his ministry was working together with the Government Debt Management Agency (ÁKK) and the National Bank of Hungary (MNB) in deciding upon the optimum time to finish payment of the loan “based on the position of the budget and government reserves.” According to Magyar Nemzet’s sources, ÁKK and MNB analysts will recommend early repayment. The ministry has often cited the clear advantage inherent in clearing the loan, i.e. increasing confidence in and credibility of Hungary in the European Union and elsewhere.
Varga has also said that another option would be for the Hungarian government to release additional foreign currency bonds: “The government could come to market with a new $600 million-$700 million issue,” he told MTI, adding that “Hungary could easily finance itself from the forint market, while issues of retail PEMAK bonds … could be used to cover maturing forex debt.”
A formal decision from the government on IMF loan repayment is expected on or around July 1.
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