The European Commission hopes that Hungary will call down the first, €2 billion tranche of its €6.5 billion EU loan before the end of 2008, Amelia Torres, spokeswoman for Economic and Monetary Affairs Commissioner Joaquin Almunia, told MTI.
Almunia signed the agreement on the loan to Hungary on Wednesday. Torres said that according to the agreement between the EU and Hungary, the other three tranches of the loan are expected to be disbursed in Q1, Q2 and Q4 of 2009.
The agreement stipulates that availability of the other installments depends on the evaluation of progress in the fulfillment of specific economic requirements. These requirements include fiscal consolidation, the reform of budget management, the improvement of bank regulations and oversight and structural reforms.
The European Union has made the initial €2 billion installment of the loan contingent upon the government’s submission of a 2009 budget targeting a deficit of 2.6%. The government had submitted an amended budget meeting the above requirement. Torres added that interest on the loan will be identical to the market rate at which the EU obtained the resources.
The EU will not charge a commitment fee on the loan. Hungary will have access to the EU loan for a period of two years, while the average expiration of the loan will be at most five years. (MTI–Eco, Napi Gazdaság)