"The government promises to abolish 13th-month salaries in the public sector, to freeze public-sector wages and to limit 13th-month pensions to Ft 80,00 in its agreement with the IMF, made public yesterday.The IMF agreed on Thursday night to approve the €12.5 billion loan for a period of within 17 months, making €5 billion available immediately.
The eight-page document states that the government’s main objectives are to reduce Hungary’s financing needs and improve long-term fiscal sustainability, to maintain adequate capitalisation of domestic banks, as well as liquidity in domestic financial markets, and to shore up confidence and secure adequate external financing.
Hungary’s compliance with the conditions will be reviewed every three months from February 15.
There are no secret clauses in the agreement, Finance Minister János Veres told reporters. The government is committed to maintaining fiscal discipline in the long term, and budget consolidation in the 2010 budget, according to the document.
The 2009 budget deficit target was revised down to 2.5% of GDP and the current account deficit is forecast to fall to about 2% of GDP. Relevant legislation is to be passed by the end of the year.
Other conditions required by the IMF for the loan include the monitoring of foreign-currency lending and the increase of the central bank’s foreign currency reserves."
Source: Hungary Around the Clock.
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10.11.2008