Hungary goes cap in hand to both the IMF and EU

Julian Harris
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HUNGARY has requested precautionary financial help from the International Monetary Fund (IMF) and the European Union, it was confirmed yesterday, as the government seemingly reversed its previously-voiced opposition to working with the international lender.

A statement from IMF chief Christine Lagarde revealed that Hungary had asked for assistance, several days after an IMF delegation arrived in the eastern European state.

“The IMF team currently in Budapest will now return to Washington for consultations with the IMF’s management and the executive board,” Lagarde said.

However, some analysts have speculated that negotiations are likely to be anything but smooth. “The form that the assistance may take remains uncertain,” said Don Egginton of Daiwa Capital Markets, “as does the amount of assistance sought, and the government’s unwillingness to accept economic conditions may make negotiations fraught”.

The announcement nonetheless helped Hungary sell 50bn forints (£140m) in six-week treasury bills yesterday, Egginton said.

The forint had firmed sharply to around 303-304 versus the euro last week, but gave back some of those gains to trade at 306.84 yesterday.