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    Ukraine gets $16.5 billion IMF loan, Hungary next

    HotNewsTurkey with wires
    27 Ekim 2008 - 15:29Son Güncelleme : 27 Ekim 2008 - 15:29

    International Monetary Fund (IMF) agreed to loans for Hungary and Ukraine to keep the turmoil in global credit markets and recession concerns from decimating Europe's emerging markets.

    The IMF said late on Sunday the deal was expected to be finalized in the next few days, and the package would help to bolster the Hungarian economy's near-term stability as it tries to stave off the impact of the global financial crisis.

     

    Hungary needs the IMF help to restore investors' confidence in its currency and bonds, after its financial markets plunged in the past weeks as foreign investors dumped Hungarian assets on worries over the country's banking system and the financing of its large external debt.

     

    With the highest interest rate in the European Union at 11.50 percent after a 300 basis point emergency rate hike last week, Hungary relies heavily on foreign capital inflows to finance its debt and deficits.

     

    "The policies Hungary envisages justify an exceptional level of access to Fund resources," IMF Managing Director Dominique Strauss-Kahn said in a statement.

     

    "For emerging Europe, clearly this is good news to the extent that it reduces risk in one of the region's more vulnerable countries, reducing contagion risk," Bloomberg reported Martin Blum, an economist at UniCredit SpA in Vienna, as saying.

     

    "Look for the IMF to continue at a fast pace to ensure countries with underlying vulnerabilities are supported."

     

    IMF also agreed to give Ukraine $16.3 billion for 24 months on Sunday.

     

    Ukraine faces an economic meltdown as prices for country's main exports, including steel, drop and a weakening currency makes imports more costly.

     

    The IMF has been on a roll recently, shoring up troubled European economies. Last week, it granted Iceland a $2.1 billion loan and Belarus and Pakistan are among the countries seeking help from Fund.

     

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