The IMF precautionary credit line, a new type of loan facility offered to countries to help stave off crises, would be “perfect” for Hungary, whose bailout expires next month, Morgan Stanley said.
The precautionary credit line (PCL), aimed at nations with “moderate vulnerabilities,” was presented last week by the IMF to attract more countries to its contingency financing program. It requires semi-annual reviews by the Washington-based lender, instead of the quarterly reviews for Hungary’s 20 billion euro (US$26 billion) IMF-led bailout, Morgan Stanley said.
Hungary, the first EU member to obtain a bailout in 2008, doesn’t need a new IMF loan because it can finance its budget deficit from the market, Hungarian Economy Minister Gyorgy Matolcsy said on Friday.
Hungary wants to regain its “economic sovereignty” and doesn’t want to negotiate economic policy with the IMF, Hungarian Prime Minister Viktor Orban said after the fund failed to endorse the government’s budget plans in July.
“The PCL represents another line of defense which we think is ready to be used should Hungary request it,” Morgan Stanley said in a note yesterday. “The IMF is clearly keen to step in and contain the situation as it did in 2008-09. We do not doubt that Prime Minister Orban’s rhetoric would turn much softer towards the IMF if the situation became really serious.”
The precautionary credit line targets countries that would not qualify for the existing flexible credit line. The loan would be made available based on the assessment of a country’s external position, the ability to finance itself from the market, fiscal discipline monetary policy and the health of the banking system, Morgan Stanley said.
“When one reads the conditions, the PCL would be perfect for Hungary, a country whose fundamentals are not strong enough to qualify for the flexible credit line but which also implemented impressive policies in recent years, achieving a much better fiscal position,” Morgan Stanley said.
SOLIDARITY: A group of European lawmakers condemned China’s aggressive moves, while the foreign minister of Lithuania said Taiwan ‘cannot become a second Ukraine’ A German parliamentary delegation would visit Taiwan in the first week of October, German lawmaker Holger Becker on Monday told visiting Democratic Progressive Party legislators Fan Yun (范雲) and Lin I-chin (林宜瑾) at the Bundestag in Berlin. Asked by Fan whether he is worried about possible reprisals from Beijing, such as banning him and his family from entering China, Becker said he is more interested in visiting Taiwan, as “now is the time for democracies to stand together.” Fan and Lin also met with German officials to exchange views on digital education and governance. Investing in digital infrastructure and protecting equal rights to
As China waged extensive military exercises off Taiwan, a group of US defense experts in Washington was focused on their own simulation of an eventual — but for now entirely hypothetical — US-China war over the nation. The unofficial what-if game is being conducted on the fifth floor of an office building not far from the White House, and it posits a US military response to a Chinese invasion in 2026. Even though the participants bring a US perspective, they are finding that a US-Taiwan victory, if there is one, could come at a huge cost. “The results are showing that under
‘SIMULATED ATTACKS’: Ten warships each from China and Taiwan were maneuvering at close quarters in the Taiwan Strait, with some Chinese vessels crossing the median line Taiwan yesterday reiterated that it would not succumb to pressure from Beijing after China carried out its most provocative military drills in decades in retaliation for US House of Representatives Speaker Nancy Pelosi’s trip to Taiwan last week. “We will never bow to pressure. We uphold freedom and democracy, and believe Taiwanese disapprove [of] China’s bullying actions with force and saber rattling at our door,” Premier Su Tseng-chang (蘇貞昌) said yesterday. China had “arrogantly” disrupted regional peace and stability, he said, calling on Beijing to not flex its military muscles. President Tsai Ing-wen (蔡英文) has also called on the international community to “support
DRILLS CONTINUE: China’s creation of a restricted zone across the median line of the Taiwan Strait challenges a 70-year-old fact, a ministry of defense official said The nation’s military fully complies with international rules and guidelines when responding to Chinese military drills, the Ministry of National Defense said yesterday, vowing to continue defending Taiwan in accordance with international law. China on Thursday launched four days of military drills around Taiwan proper in response to US House of Representatives Speaker Nancy Pelosi’s visit to Taipei. The drills were expected to end on Sunday, but neither Beijing nor Taipei confirmed their conclusion, although the Ministry of Transportation and Communications said it had seen some evidence suggesting at least a partial drawdown. However, China yesterday said the drills would continue, saying “the