Hungary and IMF agree on rescue package

By Lesley Wroughton

WASHINGTON (Reuters) - Hungary has reached agreement with the International Monetary Fund and European Union on a broad economic rescue package, including substantial financing, to stabilise its economy rocked by the global financial crisis, the IMF said on Sunday.

"A substantial financing package in support of these strong policies will be announced when the program is finalized in the next few days," IMF Managing Director Dominique Strauss-Kahn said in a statement that did not indicate the size of the package.

"Participants will include the IMF, the EU, and some individual European governments, together with regional and other multilateral institutions," he added.

He said the package would help to bolster the Hungarian economy's near-term stability and improve its long-term growth potential.

"The authorities' program will ensure fiscal sustainability and strengthen the financial sector," he added.

Hungary had lined up potential financial help from the IMF and the European Central Bank earlier this month after foreign investors dumped Hungarian assets, its currency plunged and the government bond market froze up on worries over the country's large external financing need.

Hungary, which is a member of the European Union, has been in talks with the Washington-based global lender since early October to try and restore confidence in falling markets.

Hungary's government and the central bank have taken a series of measures to shore up the currency and financial markets, and the central bank hiked interest rates by as much as 300 basis points on Wednesday to 11.5 percent in an emergency move.