Hungary has asked the International Monetary Fund and the EU for financial assistance.
"The IMF has received a request from the Hungarian authorities for possible financial assistance," IMF managing director Christine Lagarde said in a statement.
She added that the Hungarian authorities had indicated that they planned to treat any support as "precautionary".
Lagarde said an IMF team currently working in Budapest would now return to Washington for consultations with the IMF management and board.
Hungary has suffered from the euro zone debt crisis as well as the economic policies pursued by Prime Minister Viktor Orban's centre-right government, which has made investors wary, analysts say.
Official figures recently showed that Hungary's total debt had risen to 82% of gross domestic product by September from 75% at the end of June, which the authorities blamed on a weakening forint.
Since coming to power in April 2010, the government has levied huge taxes on various sectors to fill budget holes caused by falling domestic consumption and an income tax cut, and effectively nationalised €11 billion in assets held by private pension funds.
It also introduced a controversial scheme to allow those people who had taken out foreign currency loans to repay their mortgage loans at below-market exchange rates, forcing the lenders to take the resulting losses.
Analysts predict Hungary will have the lowest growth among the 10 EU newcomers which joined in 2004, expanding just 0.5% in 2012. Credit rating agencies Standard and Poor's and Fitch have warned that Hungary's outlook is clouded due to government policies and strains on its economy.
Hungary is rated one notch above non-investment grade and a cut to junk status would make the financing of its sovereign debt even more expensive and difficult.
The country has already experienced difficulty finding investors willing to buy its debt, with several bond auctions cancelled in recent weeks.
