Hungary will meet euro zone criteria faster than planned after securing a €20 billion rescue loan from the IMF, the EU and the World Bank, Hungary’s Economy Minister Gordon Bajnai said.
The country needs to adopt the euro and “the faster the better,” Bajnai and central bank President András Simor told reporters Wednesday. The bailout will “unequivocally” stem the financial crisis in local markets, Bajnai said. Hungary earlier forecast meeting euro-entry terms on the budget deficit, inflation and debt by next year.
The central bank, which raised the benchmark interest rate last week to 11.5%, the EU’s highest, from 8.5% to stem speculative attacks, needs to “think it over” on the direction monetary policy should take after the rescue plan, Simor said. The bank continues to aim for price stability, he said.
The government raised its inflation forecast for next year to 4.5%, from 3.9%, Finance Ministry Ferenc Pichler said. The standby-loan, which Hungary can draw on as needed, will more than double the country’s €17 billion worth of foreign currency reserves, Simor said. The package will help Hungary finance its debt in the short-run and will spur policies, such as a faster reduction of the budget deficit, that will sustain the country’s finances, Anne-Marie Gulde, an adviser to the IMF. (Reuters, Gazdasági Rádió)