Hungarian Economy Minister Matolcsy, right, and Prime Minister Orban had previously cut ties with the IMF [Reuters]

The International Monetary Fund (IMF) and the European Union have said that they are considering a request from Hungary for "precautionary" financial support.

Christine Lagarde, the head of the IMF, and the European Commission, the EU executive, both issued statements on Monday saying that Hungarian authorities had asked for "possible financial assistance". The government in Budapest hopes a new credit line will boost investor confidence and stabilise the country's finances.

With its credit rating just one step from junk status, Hungary announced last week that it would seek a "safety net" - but no new loans - from international lenders to help support economic growth.

In 2008, during a Socialist government, Hungary became the first EU member to receive an IMF-led bailout, an estimated $25bn loan to avoid defaulting on its debts.

Last year, however, Viktor Orban, Hungary's prime minister, and Gyorgy Matolcsy, economy minister, cut ties with the IMF and implemented a series of controversial economic policies, such as windfall taxes on the telecommunications, banking and other sectors, in an effort to increase state revenues while avoiding unpopular austerity measures.

Orban, Matolcsy and other government officials have been very critical of the IMF, so having to seek support from the Washington-based fund was considered a blow to the administration's political integrity.

Still, the new IMF-EU deal, which the government said could be agreed upon in early 2012, is far from certain, because Orban wants Hungary to maintain its "free hand" to set economic policy, a condition the lenders are highly unlikely to accept.

Despite the political U-turn, Janos Lazar, head of the governing Fidesz party's parliamentary faction, said Monday that Matolcsy enjoyed "100 per cent" support among its deputies, temporarily cooling expectations that the minister's credibility problems could soon force him out.