EU sees no "direct consequences" for Hungary after halting loan talks

13:25, July 20, 2010      

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Hungary will suffer no direct consequences after the European Union and the International Monetary Fund decided to halt loan talks with the eastern European country, the European Commission said Monday.

EU spokesman Ton van Lierop told reporters that at this stage there are "no direct, imminent consequences" after the EU and IMF decided to postpone conclusions of their fifth review mission to Hungary.

To help Hungary struggle out of the financial crisis, the IMF, the World Bank and the EU granted the country an emergency standby loan of 20 billion euros (about 25.1 billion U.S. dollars) in November 2008. Until now, Hungary has received 14.29 billion euros (about 18.43 billion dollars).

The EU and IMF conducted their fifth review mission from 6 to 17 July and decided to postpone a conclusion of the review, the European Commission said in a statement Saturday.

The statement welcomed the new Hungarian government's commitment to cut its budget deficit to 3.8 percent of GDP for 2010, but said "the corrective measures considered so far fall somewhat short of the required adjustment and are largely of a temporary nature."` The Commission urged the Hungarian government to make increased efforts to bring the deficit below 3 percent in 2011 "on a sustainable basis." It also warned that the planned financial sector levy in its current form would have a "significant negative impact on the country' s investment climate and economic growth."



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