The first installment of €2 billion should be released before the end of 2008.
The money will help to relieve the considerable pressures on the country's financial markets.
The move came after the ECOFIN Council decided on 4 November to provide balance of payments assistance of up to €6.5 billion to Hungary. On 19 November, a Memorandum of Understanding and a Loan Agreement, setting out the economic policy and financial conditions attached to this assistance were signed.
Economic policy programme and international assistance package
In response to the serious market turbulences in the first half of October, the Hungarian authorities adopted a series of measures to restore investor confidence and alleviate the stress experienced in the financial markets. The EU and the IMF also reacted swiftly in support of Hungary, issuing statements of support. From 13 October onwards, the Commission and the IMF held discussions on an economic policy programme that would be supported by an international assistance package (including €12.5 billion which the IMF approved on 6 November and €1 billion from the World Bank).
On 30 October, the Commission adopted a proposal for Community medium-term financial assistance for Hungary of €6.5 billion. On this basis, the Ecofin Council took a decision on 4 November (14953/2/08). The Memorandum of Understanding, signed on 17 November by the Minister of Finance and the Governor of the National Bank of Hungary and on 19 November by Commissioner Almunia, sets out the economic policy conditions attached to the Community loan. These include fiscal consolidation, fiscal governance, financial sector regulation and supervision reforms and other measures to support a prudent, stability-oriented, and sustainable economic policy.
Following the signature of the Memorandum of Understanding and the Loan Agreement, it is expected that the first tranche of €2 billion will be released before the end of the year. The Commission will borrow the necessary funds on the financial markets on behalf of the Community.
Article of November 20, 2008.
Updates: 9 December 2008
The Commission disbursed the first instalment (EUR 2 billion) of the Community loan to Hungary.