Central Europe: Hungary’s bitter reunion with the IMF
25 November 2011
Financially weakened, Budapest has requested assistance from the International Monetary Fund, as part of a deal to be negotiated between now and January 2012. The Hungarian press wonders if the move amounts to an admission of failure on the part of Prime Minister Viktor Orbán, or if it has resulted from a cabal against his independence policy?
Let’s not try to make it look pretty, there’s no point: the fact that we have resumed negotiations with the IMF [on 21 November] amounts to a surrender.
There is no other way of describing what has happened, because last summer we called our separation from this organisation the “war of independence” [Hungary broke off talks with the IMF, whose recommendations it refused to accept. In 2008, the Hungarian state received 20 billion euros from the IMF, the World Bank and the EU]. The surrender is bad news, and a humiliation for those who are fighting for independence.
At the same time, it is particularly infuriating to see how market players acted in a coordinated manner to push the country down this road. Even more strange, the market hysteria based on groundless and far-fetched rumours, which in all likelihood were deliberately disseminated, was amplified by the arrival of the IMF delegation.
In the wake of several months of calm, we have become the new epicentre, as one Wall Street Journal blogger put it, of the crisis that is traversing the Union. While one Bloomberg employee gleefully announced we were going down the drain, two ratings agencies moved to threaten our status and the forint-euro exchange rate sank to a historic low.
We waited in vain for help
Day after day, as the vise continued to tighten, commentators, analysts and investors joined in chanting the same mantra: that our misfortunes would be at an end if Hungary signed a new agreement with the IMF. And then, as if by magic, it came to pass,… as they say in the folk tales. The IMF and Hungary were back together, although if the announcements were to be believed, the celebration of their nuptials would have to wait until January.
It goes without saying that during the campaign of market attacks, we waited in vain for assistance, if only of a verbal kind, from Brussels. These days, the centre of the Union is preoccupied with the problems of the Eurozone, we have been forgotten. Or perhaps, it also suits them that we do not harp on about our independence.
In conclusion, every time I think about what has penned, a scene inspired by contemporary Hungarian reality springs to mind. We are opening a restaurant on the shores of Lake Balaton, when one day some hefty visitors decide to pay us a call.
Their proposal is simple: they are convinced that in this nasty world, we will need some protection which they can provide. We tell them that we do not want any, and can get by alone. Okay, they say. Then one day the restaurant goes on fire. And suddenly, the tables have turned: the offer of protection seems quite attractive.