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Hungary likely to wait on foreign bond issues till after IMF-EU deal

Hungary will probably wait until after it reaches an agreement on precautionary financial assistance from the International Monetary Fund and the European Union to start foreign bond issues planned for this year, deputy state secretary at the National Economy Ministry Roland Nátrán suggested at a conference organized by business daily Napi Gazdaság on Thursday.

Nátrán said the most advantageous time to start the €4 billion of issues planned for 2012 would be after the successful close of negotiations with the IMF and the EU.

Maturing foreign currency debt is €4.7 billion, including about €1.3 billion in bonds and €3.3 billion due on the IMF loan Hungary received under a standby arrangement reached late 2008. The gap will be financed by international project-financing loans according to earlier information from government debt manager AKK.

Market financing of the Hungarian state was secure, he said. "I don't see any trend that would endanger daily or weekly financing," he added.

He noted that the government had €1 billion deposits with the central bank which would grow to €1.5 billion by the end of 2012. The deposits are from the drawn and unused part of the previous IMF-EU loan which will grow after repayment of amounts lent to banks, earlier information from AKK shows.

While the net financing requirement of Hungary's general government is low this year, the gross financing requirement is high, Nátrán said. The current financing requirement of the general government is near a historic low, expected to reach HUF 674 billion or 2.1% of GDP this year, he added.

He said the low net financing requirement could still be maintained next year, even after sectoral "crisis taxes" are phased out and the bank levy is reduced.