The Hungarian government plans to repay the remaining EUR 2.2bn tranche of an IMF loan it received in 2008 by August 12, seven months ahead of schedule, MTI news agency reported citing an economy ministry's statement. The government decided on the early repayment as favourable bond yields and improved investor confidence have helped Hungary build significant portfolio of deposits with good financial conditions.
Hungary drew a EUR 7.5bn loan from the IMF as part of a late 2008 standby arrangement. The last last instalment payment was due in March 2014. In parallel, the IMF extended a EUR 1.45bn loan to the Hungarian central bank. Similar to the government’s move ,the bank will also repay the outstanding part of the loan ahead of schedule.
The early IMF loan repayment would reduce Hungary's international reserves by EUR 2.2bn.
Hungary's gross consolidated state debt, which stood at HUF 23,340bn (EUR 78.39bn) or 82.4% of GDP as of end-March 2013, would drop by 2.3pps.
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