{
  "title": "Transcript of a Press Conference on the Executive Board Approval of a Stand-by Arrangement for Hungary, With Anne-Marie Gulde, Senior Advisor in the IMF's European Department and Mission Chief for Hungary, James Morsink, Division Chief in the European Department",
  "publication": "IMF News, November 21, 2008",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/28/04/54/tr081106b",
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  "summary": "IMF Executive Board approved a Stand-By Arrangement for Hungary in the amount of 12.3 billion euros.",
  "publishDate": "2008-11-21",
  "sections": [
    {
      "heading": "Background and program overview",
      "content": "- IMF Executive Board approved a Stand-By Arrangement for Hungary in the amount of 12.3 billion euros.\n- Hungary was among the first emerging-market countries affected by the global financial crisis.\n- Program focus: restore financial-market stability and economic growth through fiscal and banking sector measures.\n- Complementary financing: major contributions to the overall financing packages are committed by the European Union and the World Bank; discussions with the EIB and the EBRD are ongoing regarding potential increased commitments."
    },
    {
      "heading": "Fiscal measures and social considerations",
      "content": "- Objective: reduce the size of the public sector through lower expenditures to ease short-term financing pressures and lower high levels of debt.\n- Social protection: authorities mindful of social impact; pension measures exclude low-income pensioners from cuts of benefits.\n- Specific measures:\n  - Wage freeze for public-sector employees.\n  - Suspension of the 13-month bonus for public-sector employees in 2009 (introduced in 2003), resulting in a nominal wage cut for public-sector workers.\n  - Elimination of the 13-month pension for higher-income pensioners; the 13-month pension is preserved for those with pensions up to 80,000 forints.\n  - Across-the-board expenditure restraint.\n- Impact on public expenditure: combination of measures yields a reduction in expenditure as a share of GDP of about 2 percentage points between this year and next year.\n- Fiscal targets and debt trajectory:\n  - Size of public sector: about 45 to 50 percent of GDP.\n  - Public debt: about two-thirds of GDP, about 66 percent of GDP.\n  - Government target: fiscal deficit in 2009 of about 2-1/2 percent of GDP.\n  - This is consistent with a primary surplus of about 2 percent of GDP to help reduce public debt over time."
    },
    {
      "heading": "Banking sector measures",
      "content": "- Second pillar: decisive measures in the banking area, including:\n  - Preemptive recapitalization of eligible banks.\n  - Strengthening of the supervisory and crisis-management abilities of Hungarian supervisory agencies.\n- Intended outcomes:\n  - Ensure banks' capital in Hungary remains high.\n  - Ensure supervisory authorities are prepared to recognize risks and take necessary preemptive measures.\n- Performance criteria include submission of the bank support package to parliament in the next few days and strengthening supervisory powers."
    },
    {
      "heading": "Conditionality and program ownership",
      "content": "- Conditionality focused on short-run stabilization: government deficit and banking system are primary areas of performance criteria.\n- Consultation clause on inflation projection:\n  - Inflation projected to come down from its current level of about 5-3/4 percent to about 4 percent by the end of 2009, and eventually to the inflation target of 3 percent.\n- Emphasis on strong ownership: program developed by the government, the central bank, and the authorities; this underpins confidence in implementation."
    },
    {
      "heading": "Market reaction and stabilization indicators",
      "content": "- Exchange rate: encouraging signs of stabilizing; flexible, market-determined exchange rate maintained under the program (no change to regime or band limits expected).\n- Banking sector market signals: partial recovery in the stock price of a regionally active bank cited as a positive sign; full stabilization of that bank would be a further indicator of progress.\n- Treasury bill market: earlier vulnerabilities included undersubscribed auctions and very high yields; authorities reduced supply. Return to normal conditions and ability to rollover maturing debt would signal restored confidence.\n- Timeline scenario:\n  - Reaction to initial program announcement was strong.\n  - Barring major global or regional banking home-country problems, a good-case scenario for visible stabilization could occur in weeks."
    },
    {
      "heading": "Key statistics and exact figures",
      "content": "- Stand-By Arrangement amount: 12.3 billion euros.\n- Public sector size: about 45 to 50 percent of GDP.\n- Public debt: about two-thirds of GDP, about 66 percent of GDP.\n- Fiscal deficit target for 2009: about 2-1/2 percent of GDP.\n- Primary surplus target: about 2 percent of GDP.\n- Reduction in expenditure as share of GDP: about 2 percentage points between this year and next year.\n- Inflation path: from about 5-3/4 percent to about 4 percent by the end of 2009, ultimately to 3 percent.\n- Pension preservation threshold: up to 80,000 forints.\n\nTranscript: Washington, D.C., Thursday, November 6, 2008; transcript posted November 21, 2008 — speakers Anne-Marie Gulde and James Morsink.\n\n---\n\n\n References\n\n- Hungary and the IMF\n- Conditionality\n- Transcripts\n- Watch video summary\n- Press Release: IMF Executive Board Approves €12.3 Billion Stand-By Arrangement for Hungary\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/28/04/54/tr081106b"
    }
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    "Published: November 21, 2008",
    "IMF Executive Board approved a Stand-By Arrangement for Hungary in the amount of 12.3 billion euros.",
    "Hungary was among the first emerging-market countries affected by the global financial crisis.",
    "Program focus: restore financial-market stability and economic growth through fiscal and banking sector measures.",
    "Complementary financing: major contributions to the overall financing packages are committed by the European Union and the World Bank; discussions with the EIB and the EBRD are ongoing regarding potential increased commitments.",
    "Objective: reduce the size of the public sector through lower expenditures to ease short-term financing pressures and lower high levels of debt.",
    "Social protection: authorities mindful of social impact; pension measures exclude low-income pensioners from cuts of benefits.",
    "Specific measures:",
    "Impact on public expenditure: combination of measures yields a reduction in expenditure as a share of GDP of about 2 percentage points between this year and next year.",
    "Fiscal targets and debt trajectory:",
    "Second pillar: decisive measures in the banking area, including:",
    "Intended outcomes:",
    "Performance criteria include submission of the bank support package to parliament in the next few days and strengthening supervisory powers.",
    "Conditionality focused on short-run stabilization: government deficit and banking system are primary areas of performance criteria.",
    "Consultation clause on inflation projection:",
    "Emphasis on strong ownership: program developed by the government, the central bank, and the authorities; this underpins confidence in implementation.",
    "Exchange rate: encouraging signs of stabilizing; flexible, market-determined exchange rate maintained under the program (no change to regime or band limits expected).",
    "Banking sector market signals: partial recovery in the stock price of a regionally active bank cited as a positive sign; full stabilization of that bank would be a further indicator of progress.",
    "Treasury bill market: earlier vulnerabilities included undersubscribed auctions and very high yields; authorities reduced supply. Return to normal conditions and ability to rollover maturing debt would signal restored confidence.",
    "Timeline scenario:",
    "Stand-By Arrangement amount: 12.3 billion euros.",
    "Public sector size: about 45 to 50 percent of GDP.",
    "Public debt: about two-thirds of GDP, about 66 percent of GDP.",
    "Fiscal deficit target for 2009: about 2-1/2 percent of GDP.",
    "Primary surplus target: about 2 percent of GDP.",
    "Reduction in expenditure as share of GDP: about 2 percentage points between this year and next year.",
    "Inflation path: from about 5-3/4 percent to about 4 percent by the end of 2009, ultimately to 3 percent.",
    "Pension preservation threshold: up to 80,000 forints.",
    "[Hungary and the IMF](http://www.imf.org/external/country/HUN/index.htm)",
    "[Conditionality](https://www.imf.org/en/about/factsheets/sheets/2023/imf-conditionality)",
    "[Transcripts](https://www.imf.org/en/news/searchnews)",
    "[Watch video summary](https://www.imf.org/external/mmedia/view.asp?eventID=1307)",
    "[Press Release: IMF Executive Board Approves €12.3 Billion Stand-By Arrangement for Hungary](https://www.imf.org/external/np/sec/pr/2008/pr08275.htm)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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