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Hungary not negotiating IMF loan, sees downgrade risk, says Matolcsy

Hungary is cooperating with the International Monetary Fund, but has no plans to seek a new IMF loan, national economy minister György Matolcsy said in an interview with weekly Heti Válasz, adding that he thinks it would be a sign of weakness to return to the IMF.

However, the minister said he can see a realistic threat of one credit rating agency cutting the country's rating to non-investment grade.

Matolcsy also said he would like to see Hungarian families freed from the burden of foreign currency denominated loans by the end of next year.

He said the government plans further moves to "slice off as much as possible" from the stock of retail foreign currency loans worth close to HUF 5,000bn, adding that the cabinet would like to free first families, and later companies and municipalities from the burden of forex loans.

In order to achieve this, the government is working to develop an alternative financing system, in which even a state-founded retail bank could play a part, and the existing state-owned banks could also be recapitalized. SMEs could be offered interest-subsidized loan facilities to replace forex loans with forint loans.