IMF loan recognizes Hungarian progress
The IMF loan, viewed by many as a valuable seal of approval on the country's financial soundness, hinged on the government's ability to hold the 1996 social security funds' deficit to Ft 17.8 billion and keep the country's deficit under 4% of GDP. That figure is down from 6.5% in 1995.
The loan approval opens the door for Hungary's membership into the Organization for Economic Cooperation and Development (OECD) later this month. The OECD is seen in Hungary as "the hallway to the European Union." The credit agreement came despite the fact that government officials and the IMF realize the savings are, in themselves, illusory.
According to IMF estimates, the social funds' deficit is likely to exceed Ft 17.8 billion. But the runover is also likely to be offset by a lower-than-expected central budget deficit, according to a source in Washington, D.C., close to the IMF.
"The IMF cares about the total deficit figure, not the details," he said.
The loan approval opens the door for Hungary's membership into the Organization for Economic Cooperation and Development (OECD) later this month. The OECD is seen in Hungary as "the hallway to the European Union." The credit agreement came despite the fact that government officials and the IMF realize the savings are, in themselves, illusory.
According to IMF estimates, the social funds' deficit is likely to exceed Ft 17.8 billion. But the runover is also likely to be offset by a lower-than-expected central budget deficit, according to a source in Washington, D.C., close to the IMF.
"The IMF cares about the total deficit figure, not the details," he said.
