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IIF director urges western aid in crisis

Western Europe and the United States are to blame for the present financial crisis, therefore they must support eastern Europe in order to alleviate the social costs of the crisis, Institute of International Finance (IIF) Managing Director Charles H. Dallara.

Dallara met Hungarian Prime Minister Ferenc Gyurcsány on Friday.

Gyurcsány informed Dallara of impact of the global financial crisis on Hungary, of Hungary's proposals at the recent EU summit in Brussels and the measures that the government has taken in concert with Hungary’s Central Bank (MNB) and representatives of financial organizations to alleviate the crisis over recent days, government spokesman's office informed MTI.

Dallara expressed a positive appraisal of the Gyurcsany government's measures and deemed the agreements with the European Central Bank and the International Monetary Fund to be exemplary.

Dallara told the PM that he will recommend that his partners assist central European markets following the stabilization of the financial sectors in the US and western Europe.

The government spokesman's office told MTI that Dallara said that the Gyurcsány government has made significant progress in balancing Hungary's budget.

The IIF managing director said at the press conference that the recent financial problems experienced in Hungary are not of local origin but are the result of a spread of the Western crisis.

Dallara considers the comparison between Hungary and Iceland to be absurd, saying there is no similarity in any of the two countries' macro-economic indicators and, as opposed to Iceland, the Hungarian banking system is strong.

He termed a joint announcement of the MNB and the seven largest Hungarian commercial banks issued on Friday as significant.

Dallara said Western Europe and the US are near to recession. It will take time to restore the financial system and interbank lending, he said.

The post-crisis banking system will likely operate with lower leverage and more careful risk-management. Management premiums will be lower and banks will rely much more on deposits within liabilities, Dallara said.

The IIF was founded in 1983 in response to the international debt crisis. It has nearly 400 members from 70 countries, including banks, insurance and investment management companies. Most Hungarian banks are IIF members. (MTI – Econews)