Baluarte
05-08-2013, 04:54 PM
Hungary's international reserves stood at €35.894 billion at the end of April, increasing €427 million from a month earlier, preliminary data published by the National Bank of Hungary (MNB) on Tuesday show. The increase followed a similar-size drop in March. Central bank international reserves rose €2.013 billion from the end of December and were up €727 million from twelve months earlier. After instalment payments on Hungary's 2008 International Monetary Fund loan and the redemption of a JPY 50 billion bond in March, there were no big sovereign foreign exchange expiries in April. Expiries in May include a SDR 527 million repayment on Hungary's 2008 International Monetary Fund loan to be paid by the government on May 10 and a CHF 150 million bond due on May 21. The MNB announced in April plans to cut international reserves by €3-4 billion by reducing short-term external debt by HUF 1,000 billion as part of its "Funding for Growth Scheme". Under the scheme, the MNB will provide HUF 500 billion in 0% financing to banks for SME loans and the conversion of SME loans into forint ones. For the loan conversions, the MNB will provide foreign currency to lenders at market rates from its international reserves. Lenders must commit to repaying their short-term external liabilities with the foreign currency, thus reducing the short-term foreign currency debt of the country by the same degree as the international reserves, leaving Hungary's reserve adequacy unchanged. The reduction of lenders' short-term foreign currency liabilities could be supported by FX swaps, according to the MNB. Issues related to pricing and other technical details are likely to be finalised following consultations with financial market participants. MNB deputy-governor Ádám Balog said the FX swaps could be launched early in August. National Economy Minister Mihály Varga recently voiced support for increasing the share of forint issues for government financing as a means to reduce short-term external debt.