BUDAPEST (Reuters) -Hungary could choose from four or five facilities to shore up its finances under an agreement with Washington, Prime Minister Viktor Orban said on Tuesday, with funding worth up to $20 billion available if needed. Right-wing Orban, who faces an election next year, met his longtime ally U.S. President Donald Trump at the […]
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US financial shield could be worth up to $20 billion, Hungary’s Orban says
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BUDAPEST (Reuters) -Hungary could choose from four or five facilities to shore up its finances under an agreement with Washington, Prime Minister Viktor Orban said on Tuesday, with funding worth up to $20 billion available if needed.
Right-wing Orban, who faces an election next year, met his longtime ally U.S. President Donald Trump at the White House on Friday, securing a waiver from U.S. sanctions for using Russian energy, a deal that has bolstered the forint.
The currency eased on Tuesday after Hungary raised its budget deficit targets to 5% for this year and next, with higher spending ahead of the tightly contested ballot upending deficit reduction plans.
Even so, the forint still leads gains among central European currencies this year, bolstered by the European Union’s highest benchmark interest rate amid upside inflation risks looming in part from Orban’s pre-election spending.
“I have agreed with the (U.S.) president, and we shook hands on this, that should Hungary encounter any financial difficulties, we could use one of the four or five internationally known, transparent and visible facilities,” Orban told private broadcaster ATV in an interview.
In particular, Orban cited a currency swap line or a flexible credit line among the options, which could be tapped depending on the situation. Hungary will have to seek Trump’s approval again before concluding any such arrangement, he said.
The White House has yet to comment on the plans.
Asked about the possible size of the facility, Orban said it could be worth $10 billion to $20 billion, which he described as an “insubstantial” amount from a U.S. perspective.
Orban said given the forint’s stability, Hungary did not need an Argentina-style currency swap facility, although this would also be available, if needed.
Faced with a third year of stagnation, Orban’s government has announced large-scale tax cuts for families, wage hikes, food vouchers for pensioners and other measures to shore up support ahead of the upcoming election.
Hungarian officials have said the U.S. arrangement shows the country can find alternatives to EU funding, with billions of euros currently suspended in a dispute over Orban’s rule-of-law reforms that critics see as eroding democracy.
(Reporting by Gergely SzakacsEditing by Frances Kerry)