IMF offers Hungary help as Poles rethink euro

The International Monetary Fund said on Monday it was ready to provide technical and financial support for Hungary if needed while Poland said the global financial crisis could make it rethink its 2012 date for joining the euro.

As the Polish central bank moved to boost confidence in the banking system, its governor, Slawomir Skrzypek said in a newspaper interview that there were “many arguments justifying the need to cut interest rates in Poland”.

Separately, Dominique Strauss-Kahn, the IMF’s managing-director, said the fund was in close dialogue with Budapest after Hungary’s markets had experienced stress in recent days ”despite the country’s improved macroeconomic and financial policies of the past years”.

”We will provide technical assistance as needed and, in the context of a supportive policy setting, are ready to undertake discussions on possible financial assistance, responding rapidly,” he said in a statement.

Budapest stressed it saw this offer as one that it would never need to take up.

”We needed this offer so those who attack us see that we have strong allies and that Hungary is not alone,” Prime Minister Ferenc Gyurcsany told a news conference. ”We needed this offer so we’d never have to resort to using it.”

Poland’s central bank on Monday announced it had prepared a 12-point package aimed at increasing confidence in the interbank market, which has seen costs of borrowing skyrocket in recent days. Although he declined to give details, Mr Skrzypek said the package would be presented at an unscheduled meeting of the bank’s Monetary Policy Council.

The goal is for “the National Bank of Poland will to be able to influence the increase in confidence in interbank transactions,” said Mr Skrzypek.

Although Poland’s banking system is stable, and banks did not invest in toxic US securities, it has been buffeted by global uncertainty. Wibor, the Warsaw interbank rate, has a three-month rate of 6.81 per cent, the highest in more than three years.

Mr Skrzypek insisted that Poland’s banks were solid, pointing out that the non-performing loan ratio for mortgages was a record low 1.1 per cent. “The banking system is safe,” he said.

Most banks have tightened up their lending requirements, demanding that customers put up a larger share of their own money. The Financial Supervision Authority is planning to send a letter to banks later this week that will push them to be more conservative in their lending.

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