Hungary: Stand-By Arrangement: Interim Review Under the Emergency Financing Mechanism

IMF Staff Country Reports, January 23, 2009

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Hungary: Stand-By Arrangement: Interim Review Under the Emergency Financing Mechanism

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Bibliographic details

• Published: January 23, 2009
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781451818123.002

Overview

• This paper focuses on the Stand-By Arrangement for Hungary under the Emergency Financing Mechanism.
• "Economic indicators confirm that the downturn envisaged in the program is already under way."
• The new bank support law provides Hungarian banks with access to capital enhancement and borrowing guarantee facilities.
• "The gradual reductions in the policy interest rate have been appropriate."
• "Looking ahead, continued implementation of policies in line with the program is essential to maintain investor confidence and minimize the depth of the economic downturn."

Key findings

• Economic downturn: Economic indicators confirm that the downturn envisaged in the program is already under way.
• Banking sector support: The new bank support law is important, as it provides Hungarian banks with access to capital enhancement and borrowing guarantee facilities.
• Monetary policy: The gradual reductions in the policy interest rate have been appropriate.
• Policy implementation: Continued implementation of policies in line with the program is essential to maintain investor confidence and minimize the depth of the economic downturn.

Policy implications and recommendations

• Maintain implementation of program policies to sustain investor confidence.
• Use the bank support law mechanisms (capital enhancement and borrowing guarantee facilities) to stabilize financial institutions.
• Continue appropriate monetary easing as warranted by evolving conditions, consistent with program objectives.

Subjects and keywords (as listed)

• Subjects: Banking, Bond yields, Budget planning and preparation, Central bank policy rate, Economic growth, Economic recession, Exchange rates, Financial institutions, Foreign exchange, Public financial management (PFM), Sovereign bonds
• Keywords: A. financial markets, bond yield, Bond yields, Budget planning and preparation, CR, depreciation in October, Economic recession, evolution of the markets' risk assessment, evolution of the markets' risk assessment of Hungary, exchange rate depreciation, Exchange rates, exchange regime, financial market development, Global, government bond bond yield, home market, ISCR, market, rate, Sovereign bonds, support law, support package

IMF Staff Country Report No. 2009/021; January 23, 2009; Pages: 13; DOI: https://doi.org/10.5089/9781451818123.002

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