IMF and EU suspend funding to Hungary | WPN World People News

Hungary is facing increasing pressure on its ability to fund government programs, after key support was suspended on the weekend.

The IMF and EU are insisting Hungary take tougher action to rein in its burgeoning budget deficit.

Support from the two, which had been committed to a level of $25 billion is now in doubt, although substantial funds have already been drawn down.

IMF and EU officials had been in discussions with Hungarian financial and other government officials over future funding but a major sticking point has been the willingness of Hungary to curb spending.

A resolution was expected by next week, however on Saturday the IMF and EU withdrew from further talks saying Hungary was not prepared to take tough decisions.

"In an environment of heightened market scrutiny of government deficits and debt levels, the fiscal deficit targets previously announced, 3.8% of GDP in 2010, and below 3% of GDP in 2011, remain an appropriate anchor for the necessary consolidation process and debt sustainability, and should be adhered to, but additional measures will need to be taken to achieve these objectives," the IMF said in a statement.

"Sustainable consolidation will require durable, non-distortive measures, which the authorities need more time to develop," the IMF statement added.

The uncertainty will likely hit financial markets on Monday with pressure building on Hungarian bonds, equities, and currency.

Source:Europe News.Net