Hungary Used Forint Issuance to Pay Back Foreign Debt, MTI Says

Hungary used forint-denominated debt to finance the repayment of as much as 360 billion forint ($1.5 billion) of foreign-currency debt this year, state news service MTI said, citing Gyula Pleschinger, state secretary at the Economy Ministry.

The country, which has 5.5 billion euros in maturing debt this year, has the resources to repay this debt, Pleschinger said, adding that the government didn’t want to use up its reserves given the unfolding European crisis, MTI reported.

A financing agreement with the International Monetary Fund and the European Union would help cut financing costs by as much as 2 percentage points and would allow the central bank to decrease the level of foreign-currency reserves, Pleschinger said, according to MTI.

Parliament will vote on a planned financial transaction tax in early July and the Cabinet will hold several rounds of talks with commercial banks on the levy prior to the vote, MTI cited Pleschinger as saying.

To contact the reporter on this story: Edith Balazs in Budapest at ebalazs1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net