Hungary Seeks Aid From EU, IMF
The Wall Street Journal reports Hungary Seeks Aid From EU, IMF
The European Commission said Monday that it has received a formal request from Hungary to receive financial assistance from the European Union and the International Monetary Fund.
"The Commission will examine the authorities' request in close consultation with EU member states and the IMF," the commission, which has antitrust powers in the EU, said in a statement.
In a separate statement, International Monetary Fund Managing Director Christine Lagarde also said it has "received a request from the Hungarian authorities for possible financial assistance."
The ministry said it expects to start the negotiations before Christmas, with a new agreement to be concluded in the initial months of 2012. It didn't disclose details on the nature of the requested IMF support. The government would seek a deal with the IMF on an insurance contract to reassure investors and to allow Hungary to raise the capital it needs, it said.
No Government in Belgium Since June 2010, Negotiator Quits
Belgium is still without a government and has been since June 2010. Every time there has been a hint of a breakthrough, the setup collapses. Fed up with lack of progress, the Belgian chief government negotiator asks to quit
BRUSSELS: The lead negotiator in Belgium’s drawn-out government formation tendered his resignation on Monday after talks for a 2012 budget ground to a halt, a move which threatened to derail the country’s near 18-month search for a new administration.Austrian Banks to Limit Lending to East
Elio Di Rupo, leader of the French-speaking Socialists, had attempted to form a government based on a six-party coalition of Dutch and French-speaking Socialists, Liberals and Christian Democrats but there was little common ground on how to make the budget cuts mandated by the European Union.
Parties in the debt-heavy country had sought to save 11.3 billion euros and keep the country’s deficit below 2.8 percent of gross domestic product (GDP), in line with EU rules, but could not agree how to divide the deficit reduction between new taxes and savings.
When the budget talks, which are essential to the formation of a new government, made no progress on Monday, Di Rupo handed in his resignation to the country’s monarch, King Albert II.
Di Rupo handed in his resignation once before, in July, when talks over the electoral boundaries collapsed. At that stage the palace did not accept his resignation and talks resumed shortly after.
Belgium has come under market pressure over its lack of a new government and sovereign debt nearly as big as its GDP, with its cost of borrowing increasing steadily. Spreads between Belgian 10-year bonds and benchmark German Bunds rose sharply in November, going above 300 basis points, up from 103 basis points at the start of 2011.
Belgium’s interim government, headed by Yves Leterme, is preparing an emergency budget, based on the 2011 budget.
The Financial Times reports Austrian Banks Told to Limit Lending to East
Austrian bank supervisors have instructed the country’s banks to limit future lending in their east European subsidiaries, a further sign of the potential knock-on effects of the eurozone crisis for economies around the world.A quick check of Belgium 10-year government bonds shows the yield has risen to 4.87% vs. 1.91% for Germany.
The restrictions come as Austrian officials seek to defend the country’s AAA credit rating, amid concerns that the government might have to bail out its banks because of losses in central and eastern Europe, where they are the biggest lenders, and their exposure to Italy.
The moves by Austria, which appear to be unilateral, show how even the eurozone’s strongest economies are feeling the pressure of the sovereign debt crisis.
The Austrian central bank said in a statement that Erste Group, Raiffeisen Bank International and Bank Austria, owned by UniCredit of Italy, would be prevented from loaning significantly more in CEE countries than what they raise in local deposits. Subsidiaries that are “particularly exposed” must ensure the ratio of new loans to local refinancing is not more than 110 per cent.
The three banks’ CEE exposure exceeds Austrian GDP, raising concerns that the government would be unable to bail them out if their loan portfolios turned sour. The announcement came just as the spreads of Austrian bond yields over German Bunds rose to record highs and was also designed to calm market jitters, a central bank official said.
Mike "Mish" Shedlock
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