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Hungary economy ministry sees no need for new IMF loan agreement

Hungary does not need a new agreement with the International Monetary Fund, therefore such an agreement is not the aim of the talks planned with the IMF for the autumn, the National Economy Ministry said on Wednesday.

The ministry on Tuesday confirmed press reports that it plans to continue talks with the IMF in the autumn. "We continue to engage with the authorities with a view to bridging remaining differences," ann IMF spokesperson said in a statement on Tuesday.

Negotiations held as part of a regular review of Hungary's IMF standby facility were suspended in July.

The planned talks in the autumn will consist exclusively of regular economic policy consultations under the IMF treaty, the ministry said in a statement on Wednesday.

The Wednesday statement also confirmed that the Hungarian government has retained the originally planned 3.8%-of-GDP deficit goal for 2010.

The Hungarian state has not initiated any drawdown of the EUR 20bn IMF-EU-World Bank facility approved to it late 2008 since July 2009, is able to finance itself from the market and plans to do so in the period ahead, the ministry announcement said.

Including €1.4 billion drawn by the National Bank of Hungary in the summer of 2009, Hungary has called a combined €14.2 billion of the originally 17-month arrangement which was extended to October 2010, earlier information shows. Released but uncalled instalments from the IMF facility total €2.4 billion.

Hungary will have to start repayment of the loans drawn from the international package by repaying €2 billion to the European Union in Q4 2011. Loan repayment to the IMF will start in Q1 2012 and will be completed in Q3 2014, with the bulk due in 2012 and 2013. The remainder is to be repaid to the EC in two instalments by Q2 2016.

Net debt on the loans is below the amount drawn as part of the disbursed loans have not been used but has been deposited with the National Bank of Hungary (MNB). Such foreign currency deposits held by the State Treasury at the MNB totalled around €4.1 billion at the end of July, figures of the Hungary's state debt manager ÁKK show. (MTI-ECONEWS)