The Funds international currency (the IMF) granted Tuesday to Hungary 12,5 billion euros of loans, followed by the EU who resolved 6,5 billion euros and the World Bank with a billion euros.
Previously, the European Central bank (ECB) had promised in mid-October a loan of 5 billion euros in Budapest to help it to overcome its problems of liquidities of the banks. This loan was the first in the history of the ECB allotted to a country non-member of the euro area.
The financial perfusion intervenes after the dive of the Magyar currency of 20% compared to the euro in October, fallen Saturday with 285 forints for one euro, and the Budapest Stock Exchange tumble whose index BUX lost more half of its value.
Wednesday, the forint went back to 255,61 forints for one euro and the BUX was clearly hardened gaining more than 11% after the advertisement of the massive assistances of the international institutions.
As of Tuesday, the First socialist minister Ferenc Gyurcsany, with the head of a minority government, had stressed that he wanted “to eliminate the risk of the bankruptcy of the State even under the worst scenario of evolution of the international financial crisis”. He was to specify measurements which he intended on television to take in the evening.
A foreground of austerity launched by the Prime Minister had made it possible to bring back the budget deficit of 9,2% of the GDP in 2006 to 5% in 2007 and the government envisages 2,6% per 2009.
The trade banks were delighted Wednesday by the international support: “The process of correction of the area will continue, that prevails for Hungary also which already proved in the past that it is able to overcome the challenges of a negative environment”, announced in an official statement Herbert Stepic, chairman of Raiffeisen International, banks Austrian present in Hungary since 1986.
Its counterpart of the Austrian group Erste Bank, Andreas Treichl, stressed that “negative environment surrounding the area and especially Hungary did not reflect the enormous growth potential of the real economies”.
For the analyst of bank K&H György Barcza, “in addition to a demonstration of solidarity within the EU, the loans for Hungary mean that the financial institutions would not let in no case to develop a scenario of dominos” in the area.
According to him, the loan of the IMF and that of the ECB are enough to finance the short-term expiry of the foreign debt of the country (32 billion euros) whereas the total public debt is of more than 60% of Gross domestic product (GDP). “80% of the Hungarian banks are subsidiary companies of banks German and Austrian and they cannot be allowed that the crisis are propagated with the head offices”, he added.
As of Tuesday, Ferenc Gyurcsany had announced a probable recession of the economy, considering even a retreat of 1% of the growth in 2009, and had suggested a first series of economies. It thus evoked for 2009 the freezing of the wages and the not-payment of 13th month in the public office as well as the non-payment of the annual no-claims bonus of the leaders of the state enterprises. A tax reform as that of the retirements are also considered.
“The government endeavours to protect until its last blood drops the position from the pensioners”, who do not perceive on average that 55.000 forints/month is 215 euros, according to the Prime Minister. He however proposed that 13th month of retirement is paid only with more than 62 years and is limited to 80.000 forints (312 euros).
The trade unions see in this plan of austerity “a rupture of the social pact” in force for 2008 and claimed “urgent” negotiations with the government.
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