Hungary will not need further IMF aid: finance minister

(BUDAPEST) - Hungary, which narrowly escaped bankruptcy 16 months ago, will forego the next instalments of aid from the International Monetary Fund and European Union, Finance Minister Peter Oszko said on Monday.

"Hungary will not need the next tranches of the loan from the IMF and EU, because it will be able to drum up the financing from the markets on its own," Oszko told reporters on the sidelines of a visit by IMF and EU officials.

Hard hit by the financial crisis, with investors shunning its markets, Hungary received a credit worth 20 billion euros (25.1 billion dollars) from the IMF, the World Bank and the EU in October 2008.

So far, Hungary has received 8.34 billion euros of the IMF's 11.5-billion-euro facility and 5.5 billion euros of the EU's 6.5-billion-euro loan.

But the government already said in November that the country's improved economic situation would enable it to forego the next instalments.

Nevertheless, with the upcoming general election in April, it will up to the next government to "maintain professional cooperation with the international financial institutions," the minister said on Monday.

Oszko forecast that it would be possible to uphold the government's deficit target of 3.8 percent of gross domestic product (GDP) on condition that Hungary "stick to rigorous fiscal policy and preserve its budgetary reserves."

The minister also tweeked the government's economic forecasts for this year, predicting that GDP would contract by just 0.2 percent, instead of the previous forecast for a decline of 0.3 percent.

"The Hungarian economy has stabilised and is on an adequate path, but rigorous budget policy is indispensable if it is to achieve its deficit goal" of 3.8 percent for 2010 and below 3.0 percent for 2011, said EU representative Barbara Kauffmann.

The head of the IMF delegation, James Morsink, noted that "thanks to the austerity programme, Hungary could be able to bring down its external debt to 66 percent of GDP over the next five years" from the current level of 80 percent.

As one of the conditions for the bailout, the government agreed to implement draconian spending cuts and belt-tightening measures.