Hungary Has Enough Financing If Greek Situation Worsens -Official
May 16 2012 - 8:14AM
Dow Jones News
Hungary's government has more than enough financing to cope
should the situation in Greece deteriorate further, an official at
the economy ministry said Wednesday.
"We have no direct linkages with the Greece sovereign...although
the indirect linkages are important because there's no question and
doubt that if the situation worsens in Greece then it will have an
effect on periphery countries of the European Union, including
Hungary," said Roland Natran, deputy state secretary of Hungary's
economy ministry.
The biggest potential impact of any escalation in the Greek debt
crisis is the financing of the state or liquidity across the
financial sector, he said.
Hungary has "enough contingency plans for financing" the state,
Natran said, noting pension fund assets and the substantial stock
of shares in Hungarian oil and gas firm MOL Nyrt (MOL.BU).
In addition, Hungary's central bank has foreign exchange
reserves close to EUR40 billion which "is a very good basis....to
manage a situation when the financial sector is short," he
added.
Hungary's plans to secure a financial aid package with
international lenders, such as the International Monetary Fund,
will also help should the situation in Greece worsen, sending shock
waves through financial markets, Natran said.
The country intends to secure a precautionary loan agreement
with the IMF and the European Union to serve as a backstop in
troubled times and to regain international investor confidence.
However, official talks can't start until Hungary aligns its
central bank law with EU legislation.
This should happen by the end of May, Natran said, allowing
talks to commence in June. Once an agreement is reached, Hungary
will look to return to international capital markets to sell a
foreign-currency denominated bond, Natran said, as it will be
cheaper then.
-By Clare Connaghan, Dow Jones Newswires; +32 (0) 2741 1489,
clare.connaghan@dowjones.com (Veronika Gulyas in Budapest
contributed to this article.)
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