2009/102/EC: Council Decision of 4 November 2008 providing Community medium-term financial assistance for Hungary
Date: 2008-11-04
Institutions: Council of the European Union
Subjects: EU financial instrument, EU programme, European social policy, Hungary, economic recession, economic support

6.2.2009

EN

Official Journal of the European Union

L 37/5

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COUNCIL

COUNCIL DECISION

of 4 November 2008

providing Community medium-term financial assistance for Hungary

(2009/102/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 332/2002 of
18 February 2002 establishing a facility providing medium-
term financial
for Member States' balance of
payments (1), and in particular Article 3(2) thereof,

assistance

Having regard to the proposal from the Commission made after
consulting the Economic and Financial Committee (EFC),

Whereas:

(4)

(5)

(1)

(2)

(3)

By Decision 2009/103/EC (2),
grant mutual assistance to Hungary.

the Council decided to

the

expected improvement

current
in the
Despite
account, Hungary’s external
financing needs in 2008
and 2009 are estimated at EUR 20 billion as,
in view
of the recent developments on the financial market, the
capital and financial account could substantially dete­
riorate, with the acceleration of net portfolio outflows.

It
to
is appropriate to provide Community support
Hungary of up to EUR 6,5 billion under the Facility
providing medium-term financial assistance for Member
States' balance of payments which was established by

Regulation (EC) No 332/2002. That assistance should be
provided in conjunction with a loan from the Inter­
national Monetary Fund of SDR 10,5 billion (around
arrangement
EUR 12,5 billion)
expected to be approved on 6 November 2008. The
World Bank has also agreed to provide a loan to
Hungary of EUR 1 billion.

Stand-by

under

a

The assistance should be managed by the Commission
which, after consulting the EFC, should agree with the
authorities of Hungary the specific economic policy
conditions attached to the financial assistance. Those
conditions should be laid down in a Memorandum of
Understanding. The detailed financial terms should be
laid down by the Commission in the Loan Agreement.

of

balance

The assistance should be provided with a view to
supporting
in
Hungary and, in this way, contributing to the successful
the Government’s economic policy
implementation of
programme under
and financial
current
conditions,

sustainability

economic

payments

HAS DECIDED AS FOLLOWS:

Article 1

1.
The Community shall make available to Hungary a
medium-term loan amounting to a maximum of EUR 6,5
billion, with a maximum average maturity of five years.

(1) OJ L 53, 23.2.2002, p. 1.
(2) See page 7 of this Official Journal.

This Community financial

2.
shall be made
available during a period of two years starting from the first
day after the entry into force of this Decision.

assistance

L 37/6

EN

Official Journal of the European Union

6.2.2009

Article 2

1.
The Commission shall manage the assistance in a manner
consistent with Hungary’s undertakings and with recommen­
dations by the Council, in particular in the context of the im­
plementation of the National Reform Programme as well as of
the convergence programme and the excessive deficit procedure.

The Commission shall agree with the authorities of
2.
the specific economic
Hungary, after consulting the EFC,
policy conditions attached to the financial assistance as laid
down in Article 3(4). Those conditions shall be laid down in
a Memorandum of Understanding consistent with the under­
takings and recommendations referred to in paragraph 1 of
this Article. The detailed financial terms shall be laid down by
the Commission in the Loan Agreement.

The Commission shall,

3.
in collaboration with the EFC,
verify at regular intervals that the economic policy conditions
attached to the assistance are fulfilled. The Commission shall
keep the EFC informed of possible
the
borrowings or restructuring of the financial conditions.

refinancing of

Article 3

The Community financial

1.
shall be made
available by the Commission to Hungary in a maximum of
five instalments, the size of which shall be laid down in the
Memorandum of Understanding.

assistance

2.
The first instalment shall be released subject to the entry
into force of the Loan Agreement and Memorandum of Under­
standing, as well as based on the submission to the Hungarian
Parliament of the legislative amendments to the draft 2009
budget proposal, which aim at achieving a deficit of 2,6 % of
GDP and which include the underpinning budgetary measures.

3.
If required in order to finance the loan, the prudent use of
interest rate swaps with counterparties of highest credit quality
shall be permitted.

4.
The Commission, after having obtained the opinion of the
EFC, shall decide on the release of further instalments. The
disbursement of each further instalment shall be made on the
basis of a satisfactory implementation of the new economic
programme of the Hungarian Government backed by the IMF

arrangement and also included in the forthcoming convergence
programme of Hungary and, more particularly,
the specific
economic policy conditions laid down in the Memorandum of
Understanding.

These policy conditions should include, inter alia:

(a)

the progress of
fiscal consolidation as planned by the
Government in the context of its new programme which
is in line with the Council recommendation under the
excessive deficit procedure of 10 October 2006 as well as
the Council opinion on the November 2007 convergence
programme update, in particular with respect to the 2009
deficit target;

(b) specific measures to control expenditure underlying the

planned consolidation process;

(c) progress with fiscal governance reform by strengthening the
institutional framework and introducing medium-term fiscal
rules along the lines of the draft proposal that is currently
being discussed in the Hungarian Parliament;

(d) financial sector

regulation and supervision reforms and
stepping-up the authorities' capacity to address efficiently
solvency and liquidity concerns; and

the Lisbon Strategy,

(e) other structural reform measures supported in the context
of
the reinforcement of
incentives to work with a view to supporting employment
and contributing to the long-term sustainability of public
finances.

such as

This Decision is addressed to the Republic of Hungary. It shall
be published in the Official Journal of the European Union.

Done at Brussels, 4 November 2008.

For the Council
The President

C. LAGARDE