Hungary last night became the first EU country to agree an emergency rescue package for its economy during the financial crisis when it secured backing worth $25 billion (£15.6 billion) from the International Monetary Fund (IMF), the European Union and World Bank.

The IMF in Washington said that it had reached an agreement for a $15.7 billion loan, while the EU was prepared to put in $8.1 billion and the World Bank an additional $1.3 billion. The IMF loan will be disbursed over 17 months.

The agreement amounts to the biggest international rescue package for an emerging market economy since the start of the current crisis and is the first for an EU-member country. Last week, the IMF approved a $2.1bn deal for Iceland and a $16.5bn programme for Ukraine.

“The Hungarian authorities have developed a comprehensive policy package that will bolster the economy’s near-term stability and improve its long-term growth potential,” said Dominique Strauss-Kahn, managing director of the IMF.

“At the same time it is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets.”

The IMF financing is more than ten times Hungary’s IMF quota and above the limit of three times the quota for countries seeking to borrow. Each IMF member is assigned a quota based on its size in the world economy.

Hungary’s economy has suffered because its banking system was heavily exposed to foreign financing at a time when investors were pulling back from developing economies.

Mr Strauss-Kahn said that the programme should improve Hungary’s fiscal balance and safeguard its financial sector.

“Specifically, the package includes measures to maintain adequate domestic and foreign currency liquidity, as well as strong levels of capital for the banking system,” he said.

“Important measures in the fiscal area will reduce government-financing needs and ensure longer-term debt sustainability.”

Ferenc Gyurcsany, Hungary’s prime minister, gave warning that his country was likely to slide into recession next year.

The World Bank said that it was working with Hungary to on longer-term structural problems.

“Proposed World Bank assistance would support the design and implementation of reforms in key areas, such as the financial sector, fiscal management, and social sector reforms,” said Orsalia Kalantzopoulos, World Bank director for Central Europe and the Baltic countries.

“These measures would support the country’s longer-term stabilisation and economic restructuring,” she added.

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