Fitch sees IMF-EU deal for Hungary in spring

Ratings

Fitch Ratings expects Hungary to reach a deal on precautionary financial assistance from the International Monetary Fund and the European Union in the spring, the ratings agency said on Friday.

"Fitch Ratings thinks Hungary will set out a credible deficit reduction plan to secure multilateral funding from the EU and IMF this spring," Fitch said. "This would likely result in the EU reversing its decision to suspend €495 million of cohesion funds," it added.

The European Union decided last week to suspend part of Hungary's Cohesion Fund allocation from 2013 if the country fails to take sufficient measures to bring its fiscal deficit under the 3%-of-GDP threshold. EU finance ministers are set to consider lifting the suspension at a meeting in June already.

"Our base case remains that Hungary recognizes that securing EU-IMF funding would have sufficient benefits that it will set out the required deficit reduction measures in time to meet the EU's deadline, despite the Hungarian government's recent unpredictable rhetoric and policy track record," Fitch said.

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