Hungary: Second Review Under the Stand-By-Arrangement, Request for Waiver of Nonobservance of Performance Criterion, and Request for Modification of Performance Criteria—Informational Annex

This paper discusses key findings of the Second Review under the Stand-By Arrangement for Hungary. All end-March 2009 quantitative performance criteria and the continuous performance criterion on nonaccumulation of external arrears were met, as well as the end-March indicative target on central government debt. The end-March structural performance criteria related to pension reform and government lending to banks were met. The structural performance criterion on amendments to the Financial Stability Act was not fully met but, on the basis of the corrective action taken, IMF staff supports the authorities’ request for a waiver.

Abstract

This paper discusses key findings of the Second Review under the Stand-By Arrangement for Hungary. All end-March 2009 quantitative performance criteria and the continuous performance criterion on nonaccumulation of external arrears were met, as well as the end-March indicative target on central government debt. The end-March structural performance criteria related to pension reform and government lending to banks were met. The structural performance criterion on amendments to the Financial Stability Act was not fully met but, on the basis of the corrective action taken, IMF staff supports the authorities’ request for a waiver.

Appendix I Hungary: Fund Relations

(As of May 31, 2009)

I. Membership Status: Joined on May 6, 1982; Article VIII.

II. General Resources Account:

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III. SDR Department

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IV. Outstanding Purchases and Loans:

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V. Financial Arrangements:

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VI. Projected Obligations to Fund: (SDR million; based on existing use of resources and present holdings of SDRs)

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VII. Exchange Rate Arrangement:

The Hungarian forint is freely floating, effective February 26, 2008.

VIII. Article IV Consultations:

Hungary is on a 24-month consultation cycle. The last Article IV Board discussion took place on September 17, 2008. The associated Executive Board assessment is available at http://www.imf.org/external/np/sec/pn/2008/pn08124.htm and the staff report and selected issues papers at http://www.imf.org/external/pubs/cat/longres.cfm?sk=22374.0 and http://www.imf.org/external/pubs/cat/longres.cfm?sk=22375.0. Hungary has accepted the obligations of Article VIII and maintains an exchange rate system free of restrictions on the making of payments and transfers on current international transactions except for those maintained solely for the preservation of national or international security and that have been notified to the Fund pursuant to Executive Board Decision No. 144-(52/51).

IX. Technical Assistance:

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X. Resident Representative:

Ms. Iryna Ivaschenko assumed her duties on May 1, 2009.

Hungary: Second Review Under the Stand-By Arrangement, Request for Waiver of Nonobservance of Performance Criterion, and Request for Modification of Performance Criteria: Staff Report; and Press Release on the Executive Board Discussion
Author: International Monetary Fund