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WASHINGTON - The head of the International Monetary Fund Dominique Strauss-Kahn announced on Sunday that a "substantial financing package" would be announced for Hungary in the next few days.
"An IMF staff mission and the Hungarian authorities, in close consultation with the EU, have reached broad agreement on a set of policies that will bolster the Hungarian economy's near-term stability and improve its long-term growth potential," the IMF managing director said in a statement.
"A substantial financing package in support of these strong policies will be announced when the program is finalized in the next few days."
He said the IMF, the European Union, and some individual European governments would take part with the financing package and that the policies would "ensure fiscal sustainability and strengthen the financial sector."
"The policies Hungary envisages justify an exceptional level of access to Fund (IMF) resources," Strauss-Kahn said, adding that the final decision on the granting of loans would be taken by the IMF board.
The IMF offered help for Hungary's economy last week and the European Central Bank has offered to lend the Hungarian central bank up to five billion euros (6.7 billion dollars) to back its cash loans to domestic banks.
Politicians and analysts in Hungary have insisted that the country is nowhere near bankruptcy and that the banking sector is stable.
The country's vulnerability is primarily due to a large current account and budget deficit, a partially overvalued currency, a low stock of foreign reserve and a high level of short-term foreign currency debt, analysts say.
Facing a sharp fall in the national currency, the forint, the country's central bank decided last Wednesday to raise its key interest rate by three points to 11.5 percent.
As the fallout from the financial crisis ripples around the world, a number of countries have found themselves needing assistance from the IMF, a lender of last resort to cash-strapped nations.
Strauss-Kahn also announced Sunday that Ukraine, which faces political deadlock and an economic crisis, had agreed a 16.5-billion-dollar loan from the Washington-based institution.
Iceland has also agreed a loan and Belarus and Pakistan have appealed for assistance.
Hungary was just emerging from two years of severe austerity measures aimed at reducing the government's budget deficit.
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