Paris/Brussels - The European Union is extending a loan of 6.5 billion euros (8.25 billion dollars) to Hungary to give the country added liquidity in the face of the economic crisis, French Finance Minister Christine Lagarde said on Wednesday. France currently holds the EU presidency, and Lagarde chairs the council of EU finance ministers.
Officials from the EU's executive, the European Commission, confirmed the announcement in a statement released in Brussels.
"Against the background of heightened financial market stress in Hungary, the (EU) is ready to participate in a coordinated financing package with the IMF to underpin balance-of-payments sustainability in Hungary," the statement said.
The 27-member bloc "stands ready to provide a loan of 6.5 billion euros to Hungary under the EU medium-term assistance facility," which is aimed at helping member states which are struggling to keep control of their balance of payments, the statement said.
Added to a 12.5-billion-euro loan offered by the International Monetary Fund (IMF) and another 1 billion euros from the World Bank, Hungary has received commitments worth 20 billion euros to help it confront a slowing economy, a growing budget deficit and the plunge of its stocks and currency.
On October 22 the Hungarian central bank was forced to jack up interest rates by 3 full points to 11.5 per cent in an emergency bid to defend the country's currency, the forint, which had slumped as a result of the global financial crisis.
The EU's pledge of aid "will be provided in the context of a strong commitment by the Hungarian authorities to implement a flanking policy programme" aimed at stabilizing the economy, the commission statement said.
