Δύο ενδιαφέροντα άρθρα για την Ουγγαρία

Όπως υποστήριξα σε ένα προηγούμενο σημείωμα αυτό που συμβαίνει σήμερα στην Ουγγαρία έχει εξαιρετικό ενδιαφέρον όσον αφορά τόσο οικονομικές όσο και πολιτικές εξελίξεις όχι μόνο στη χώρα αυτή.

Τα δύο άρθρα που ακολουθούν δίνουν εξαιρετικά ενδιαφέρουσες πληροφορίες (ακόμη και εάν κάποιες είναι ελεγχόμενες …) την στιγμή που στην ελληνική ειδησεογραφία είτε υπάρχει σιγή είτε ακόμη και λανθασμένες παρουσιάσεις.

Το πρώτο είναι από τους Budapest Times και το δεύτερο από το Reuters. Τροφή για σκέψη …

IMF huffs & puffs; Hungary’s financial house not blown down

Written by Robert Hodgson
Monday, 26 July 2010

http://www.budapesttimes.hu/index.php?option=com_content&task=view&id=14996&Itemid=220

Hungary was all over the international papers again last week after government intransigence over economic policy prompted the IMF and the EU to suspend a review of the 20-billion-euro standby loan dating from October 2008.


However, the scary headlines about Hungary sliding once more toward the abyss, and a rapid drop last Monday in the value of the forint and the Budapest Stock Exchange’s key BUX index, soon bottomed out. Prime Minister Viktor Orbán declared the following day that Hungary remained committed to meeting a deficit target of 3.8 per cent this year. By Wednesday, Orbán was able to stand next to German Chancellor Angela Merkel and declare that, from now on, Hungary would deal with the EU alone.
“Hungary and the International Monetary Fund had a deal, which expires in October. So there is no point in negotiating long-term questions with the IMF,” Orbán told reporters in Berlin after talks with Merkel. Whatever the German Chancellor may have said to Orbán in private, there was no public browbeating: “Hungary in the long term must return to a stable footing,” she said. “With a deficit of 3.8 per cent it doesn’t look that bad, although we have to look at next year.”
Fidesz had entered the negotiations with IMF and EU representatives during the latest quarterly policy and economic review with the intention to seek an extension of its 20-billion-euro IMF/EU loan dating from 2008 until the end of this year (it is due to expire in October).

Gov’t states commitment to 2010 deficit target

Furthermore, the government had been seeking a new standby loan deal for 2011 to act as a safety net. However, as it turned out, the IMF was not happy with Fidesz plans to balance its budget with a tax on the financial sector. Reports suggest that the government’s insistence that salaries at the Hungarian National Bank be slashed was also a bone of contention, and one that is likely to fall foul of EU legislation.
The proposed HUF 200 billion (EUR 701 million) bank tax is indeed high. Even Economy Minister György Matolcsy acknowledged that, at the equivalent of 0.7 per cent of GDP, the sum to be exacted from Hungary’s financial sector will be «brutal». Fidesz – perhaps with one eye on forthcoming local government elections – is maintaining that there will be no more austerity measures either before or after 3 October. Matolcsy sought to quell fears of another round of Hungarian fiscal recklessness after meeting his Austrian counterpart Reinhold Mitterlehner in Vienna last Monday, saying Hungary would resume talks with the IMF in the autumn..

Opposition divided


The opposition Hungarian Socialist Party (MSZP) accused Fidesz politicians last Monday of causing disastrous drops in the value of the forint twice during less than two months in office. The first occasion had been in early June, when the MP and mayor of Debrecen Lajos Kósa likened Hungary’s situation to that of Greece, sending markets into a tizzy. MSZP leader Attila Mesterházy called on the government to come up with a policy to stabilise the currency. The second largest opposition caucus, the nationalist party Jobbik, however, welcomed Fidesz’s stance with the IMF. National sovereignty «has not yet been regained, but the negotiations with the IMF and EU delegations are an important front in the struggle for economic freedom,» Jobbik said in a statement.

«We are world champions when it comes to cutting spending,» Orbán declared in Berlin, explaining his aversion to further austerity measures. Hungary does appear to be a long way from the black sheep status it enjoyed in 2006 when a pre-crisis budget deficit of 9.2 per cent was the largest in the EU.
Last year, drastic cuts to public sector pay and pensions instigated by the Socialist-backed interim cabinet of Gordon Bajnai saw that figure reduced to 4 per cent of GDP, among the lowest in Europe. The MSZP lost the general election to Orbán’s centre-right Fidesz party in April, and has since expressed exasperation at comments from senior government politicians who appeared to be taking credit for this turnaround.
What next?
«Hungary’s budget deficit cannot be higher than 3.8 per cent this year, and it will not be,» Orbán told reporters in Budapest last Tuesday after meeting his Visegrád Four counterparts. However, the target will be met on his government’s own terms, he implied: «How this is achieved, however, is strictly a national responsibility.”
Despite the prime minister’s words at home and in Berlin, Economy Minister Matolcsy had indicated during his visit to Vienna last Monday that Hungary remains open to resuming negotiations with the IMF. Having stated the latest party line, that this year’s commitment will be met, Matolcsy said the target of 2.8 per cent for 2011 can be met only if a new deal is struck with the IMF. He said talks could be held in September, to conclude after the local government elections, roughly the same time that the government will have to come up with its budget for 2011.


Q+A-Hungary’s Fidesz government after the IMF/EU talks

http://www.reuters.com/article/idUSLDE66I1V220100719

BUDAPEST | Mon Jul 19, 2010 1:55pm EDT

BUDAPEST July 19 (Reuters) – Hungary’s centre-right Fidesz government has spooked markets for the second time in less than two months, bringing talks with the IMF/EU to a premature end. Following are analysts views on what Fidesz is doing and why:

IS FIDESZ TRYING TO BUY TIME FOR LOCAL ELECTIONS?

Fidesz won a parliamentary election in April on the promise of generating growth and jobs through tax cuts, which appears to have been its only economic policy plan, analysts say.

Global markets have taken a sour turn, however, and the government was forced to abandon its budget loosening policy. It has done so half-heartedly, and the programme it was forced to put forward in June reflects a resentment toward austerity.

Fidesz hopes to maximise popular support for the local elections on Oct. 3. Before ousting the Socialists from power in April, the party had won voters by campaigning against a series of austerity measures by the left. Coming out with such measures of their own would risk alienating swathes of the electorate.

If they are to consolidate their power at the local level that will give Fidesz 3-1/2 years without an election, giving the government a freer hand.

Hungary’s existing IMF/EU agreement will expire by October, giving Fidesz enough time to secure a safety net to fall back on. It remains to be seen whether the patience of markets will last another two months.

IS THERE A DANGER FIDESZ WILL RISK CONTINUED MARKET SELLOFF?

Yes, there is. Fidesz’s popularity is rooted in a populist agenda that eschews austerity. To execute its agenda — supporting families and small businesses at the expense of taxing banks and multinational firms — Fidesz needs to control local governments.

The breaking point will likely come soon after the local elections, which will coincide with writing next year’s budget and the expiry of the current IMF/EU aid deal. If Fidesz does win local elections with a strong mandate, it can relax the populist agenda.

WHAT IS FIDESZ’ ECONOMIC PHILOSOPHY?

The party has proposed legislation to lower the tax burden on households and companies and wants the financial sector — mainly banks with west European parents — to foot the bill.

The choice to put pro-growth minister Gyorgy Matolcsy in charge of the economy reflects the idea that deficits can be reduced not just by spending cuts but also by measures increasing the country’s potential growth.

The clash over the deficit between the government and lenders masks a deeper philosophical divide between the expansionary and the restrictive school of economics at a time when most EU governments are forced to tighten their belts.

Fidesz, which wants to distance itself from leftist governments of the past 8 years, loathes the idea of austerity for fear of being branded the same as the Socialists.

Its efforts to meet the 3.8 percent of GDP budget deficit goal centre on a financial sector tax. Fidesz’s reluctance to introduce harsher spending cuts and its insistence on the bank tax strengthened its populist image among investors.

Other measures, most notably a planned pay cut at the helm of the central bank, further enhance this image.

WHO MAKES THE DECISIONS IN FIDESZ?

Prime Minister Viktor Orban, 47, is the ultimate decision maker in both the Fidesz party and the government.

Orban is the strategist when it comes to politics, while in economic matters he is said to be listening mostly to Matolcsy, who has a pro-growth vision of policy which differs from that of fiscally-focused former Socialist prime minister Gordon Bajnai.

Orban is advised by experts including ex-cental banker Gyorgy Szapary and former finance minister Mihaly Varga, but it is Orban who puts the final seal of approval on all major decisions. He has a tight grip over his party and the cabinet.

Getting back into power with an unprecedented over two-thirds majority in parliament in April was his biggest victory and gratification for elections lost in 2002 and 2006. Orban plans for the long term and has envisaged the next 15-20 years of Hungarian politics would be defined by «one central political force» — his Fidesz party. (Reporting by Gergely Szakacs, Marton Dunai and Krisztina Than; Editing by Janet Lawrence)

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