Press Release: Commission proposes financial assistance to Hungary and an increase in overall BoP loans ceiling

The European Commission formally proposed to grant financial assistance for Hungary's balance of payments (BoP). It also proposed to raise the overall ceiling foreseen in the Regulation establishing a facility providing medium-term financial assistance to European Union countries' BoPs to €25 billion from €12 billion at present. Both proposals were sent to Member States which are expected to endorse them at the finance ministers' meeting (ECOFIN) on 4 November. In the case of the amended ceiling, however, the European Parliament and the European Central Bank will need to give their opinions to the Council before the formal adoption. Despite considerable efforts since mid-2006 to correct its budgetary position and external imbalances, the Hungarian financial markets came under severe stress this month as the global financial crisis deepened and broadened. In view of this, the Hungarian government took steps to accelerate the deficit reduction and to improve fiscal governance as part of a comprehensive economic programme to foster market confidence.

• Primary Source