Hungary to tap EU aid in December: minister

(BUDAPEST) - Hungary, hit hard by the world financial crisis, will draw the first of four instalments of EU aid in December, Finance Minister Janos Veres told a news conference here on Thursday.

The EU is making a total 6.5 billion euros (8.1 billion dollars) available to Hungary as a part of a huge 20-billion-euro package of financial aid along with the International Monetary Fund and the World Bank.

Hungary will be able to draw on the loan over a period of two years and plans to do so in four instalments. The money must be paid back after five years.

The money is to come from a special 12-billion-euro EU funding facility to help non-euro members of the 27-nation bloc that have run into balance of payments problems.

EU Commissioner for Economic and Financial Affairs Joaquin Almunia signed the loan on Wednesday. EU finance ministers approved it on November 4.

Hungary, which joined the European Union in 2004, has been hit hard by the current financial crisis due to its heavy dependence on foreign capital to finance its economy and has one of the biggest public deficits in the EU.

The EU loan to Hungary marked the first time the crisis fund has been tapped since it was set up in its current form in 2002.