Article created March 13, 2009.
The money will continue to relieve the pressures on the country's financial markets.
Following the decision of the ECOFIN Council on 4 November 2008 to provide balance of payments assistance of up to €6.5 billion to Hungary, a Memorandum of Understanding and a Loan Agreement, setting out the economic policy and financial conditions attached to this assistance were signed on 19 November 2008. A first instalment of €2 billion was disbursed on 9 December 2008.
In February 2009, the Commission reviewed Hungary's implementation of the conditions attached to the second tranche and considered that it was satisfactory.
Moreover, it agreed with the authorities on a Supplemental Memorandum of Understanding that takes into account the revised government programme in response to the deteriorated macreconomic outlook.
This programme was announced on 16 February after discussions with the Commission and the IMF. In particular, it includes additional fiscal measures to limit the impact on the government deficit in 2009 (the target is revised from 2.6% to 2.9% of GDP) as well as planned reform steps notably in the pension and social security sphere designed to improve the long-term sustainability of public finances.
Supplemental Memorandum of Understanding
The release of subsequent instalments of the Community financial assistance will also be conditional upon progress in these areas. The Supplemental Memorandum of Understanding was signed on 11 March. The second instalment is expected to be disbursed by the end of March.
>> Supplemental Memorandum of Understanding(301 kB)
The Community assistance is part of an international assistance effort of EUR 20 billion, which also includes €12.5 billion from the IMF and €1 billion from the World Bank.
Update: 26 March, 2009
The Commission disbursed the second instalment (EUR 2 billion) of the Community loan to Hungary.