Financial assistance to Hungary

 

SUMMARY OF:

Council Decision 2009/102/EC — medium-term financial assistance for Hungary

WHAT IS THE AIM OF THE DECISION?

• The European Union (EU) and various international organisations provided financial assistance to Hungary between 2008 and 2010.
• The basis for this is Regulation (EC) No 332/2002 which allows the EU to provide medium-term financial assistance to EU countries not in the euro area that have difficulties in their balance of payments.

KEY POINTS

• In November 2008, the EU agreed Hungary should receive €20 billion for the 2008 and 2009 period. The funding was to be provided by:
  • EU: €6.5 billion under its balance of payments assistance programme;
  • International Monetary Fund (IMF): around €12.5 billion;
  • World Bank: €1 billion.
• In exchange for the loans, Hungary agreed to make progress on:
  • fiscal consolidation* and expenditure control;
  • fiscal governance reform;
  • price stability;
  • banking sector stability;
  • reforms of regulation and supervision in the financial sector;
  • various structural reforms.
• Overall, Hungary received €5.5 billion from the EU and €8.7 billion from the IMF. It did not call on World Bank assistance.
• With the end of the programme in November 2010, the European Commission began its post-programme surveillance, organising 6 review missions to the country.
• The surveillance ended in January 2015 after Hungary had repaid over 70% of the EU loan.
• In November 2011, Hungary requested a second round of financial assistance from the EU. In the end, this was not required because the country was able to finance itself on the international markets.

FROM WHEN DOES THE DECISION APPLY?

It applied from 5 November 2008.

BACKGROUND

• In February 2002, the Council of the European Union gave the EU the power to grant loans to EU countries experiencing, or threatened with, difficulties in their balance of payments or capital movements.
• This financial assistance is only available to countries which do not use the euro.
• Hungary first applied for assistance in October 2008 due to serious market turbulence and the government's difficulties in refinancing its debt.
• For more information, see:
  • ‘Balance-of-payments assistance to Hungary’ on the European Commission's website.

* KEY TERMS

MAIN DOCUMENT

Council Decision 2009/102/EC of 4 November 2008 providing Community medium-term financial assistance for Hungary (OJ L 37, 6.2.2009, pp. 5–6)

RELATED DOCUMENTS

Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, pp. 1–3)

Successive amendments to Regulation (EC) No 332/2002 have been incorporated in the original text. This consolidated version is of documentary value only.

last update 24.01.2017