Hungary Gets $6.7B Loan to Avert Meltdown

Budapest secures huge loan to prevent default à la Iceland
By Jason Farago,  Newser Staff
Posted Oct 17, 2008 8:33 AM CDT
Hungary Gets $6.7B Loan to Avert Meltdown
Hungary's Parliament buildings, in Budapest. The Eastern European nation is struggling to stave off an Iceland-style economic disaster.   (©Bluelemur)

The Hungarian government secured a $6.7-billion loan yesterday from the European Central Bank in an attempt to stave off an Icelandic-style national meltdown. The EU newcomer's troubles derive from loans denominated in euros or Swiss francs, rather than the softer Hungarian forint. Frozen credit markets have left Hungary's government and citizens struggling to repay their debts.

Because of high interest rates, many Hungarians took out loans in foreign currencies, leaving the nation—just like Iceland—acutely vulnerable to a falling currency. The forint has plunged almost 8% just this week; today Hungary slashed growth forecasts and began to prepare a new budget. Hungary has also called in the IMF in case the country defaults, though the country's finance minister insisted that was "a last resort."
(More Hungary stories.)

Get breaking news in your inbox.
What you need to know, as soon as we know it.
Sign up
Get the news faster.
Tap to install our app.
X
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.

X