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Hungary to seek precautionary IMF loan for 2011, prime minister's advisor confirms

Hungary is seeking a new, precautionary loan from the International Monetary Fund for 2011, György Szapáry, chief economic adviser to Prime Minister Viktor Orbán, confirmed on Wednesday.

Hungary does not plan to draw funds from the emergency loan package it obtained in 2008 from the IMF, the European Union and the World Bank, adding that the government is seeking to extend that agreement by two months to the end of this year, the news website quoted Szapáry as saying.

Hungary has called a combined €14.2 billion of the originally 17-month arrangement which was extended to October 2010. Released but uncalled installments from the IMF facility total €2.4 billion.

Szapáry first aired the idea of a precautionary loan two weeks ago.

The government does not expect to draw funds from the new loan, which it wants to use to shore up market confidence, Szapáry said.

The government has not yet started talks with the IMF on the precautionary loan agreement, but believes the IMF endorses steps that serve the long term growth of the economy, Szapáry said.

The chief adviser reconfirmed that the 3.8% of GDP overall government deficit target for this year was “a commitment”. (MTI-Econews)