The International Monetary Fund (IMF) said in a report published late on Tuesday that the macroeconomic and financial policies of Hungary are proceeding according to plan, though the country’s economic outlook has worsened due to a deterioration in the global environment and the fragility of its political system ahead of parliamentary elections scheduled for next spring.
The IMF report on Hungary derived the following conclusions with regard to the country’s economy:
-Macroeconomic and financial policies are on track. The end-March 2009 quantitative performance criteria and indicative target, as well as the structural performance criteria related to pension reform and government lending to banks, were all met. The structural performance criterion on amendments to the Financial Stability Act was not fully met, but corrective action has been taken.
-Hungary’s economic outlook has worsened due to a further deterioration of the global environment. With exports amounting to 80pc of GDP and the close integration of financial markets, the fall in external demand and tight external financing conditions are leading to a sharper-than-envisaged economic contraction. As a result, tax revenue will be lower and credit quality will be worse.
Against this background, the policy settings under the program have been revised to strengthen fiscal sustainability and preserve financial stability:
-More ambitious structural spending and tax reforms are under way to strengthen fiscal sustainability, allowing the partial accommodation of automatic stabilizers and an increase in the fiscal deficit target in 2009.
-The revised program puts additional emphasis on measures to help preserve financial stability, including careful monitoring of support for banks, strengthening bank supervision, and improving the remedial action and bank resolution frameworks.
-Monetary and exchange rate policy will continue to target inflation over the medium-term while being prepared to act as needed to mitigate risks to financial stability.
-The fragility of the political situation presents implementation risks. In April, following the prime minister’s replacement through a constructive motion of no confidence, a new government was formed. Parliamentary elections are scheduled for April 2010, but early elections are possible. To help foster broad-based ownership of the program, Fund staff have undertaken extensive outreach to the media and the political opposition, the IMF said.
The IMF, the European Union and the World Bank approved a combined EUR 20bn standby loan to Hungary last autumn as the global financial crisis hit the country.
In the light of a worse than foreseen recession, the IMF and the European Commission agreed during May consultations on the loan, that Hungary’s ESA general government deficit target be updated to 3.9pc of GDP for 2009, to 3.8pc for 2010 and 2.8pc of GDP in 2011. The deficit targets were upped from a 2.6pc of GDP target this year, 2.5pc next year and 2.2pc in 2011 in the December 2008 convergence plan.
Decades after the Latin American countries have written off the IMF as a bunch of meddling imperialist leeches, the Republic of Hungary is embracing the IMF as the All-Knowing, Always-Helpful Nirvana. Wow!!!
@Donizelli. Lumping inflammatory words together doesn’t necessarily translate into generating meaningful sentences.
The above point was not that HU accepted the prognosis, it was simply a report … and strangely, it’s probably more spot on that the HU statistics. So who do you think is better poised to assess the situation? And while you’re at it, the IMF actually lent money to HU to keep it from skipping off into meltdown. Now we could debate whether that was a good or a bad thing (I frankly think giving lung cancer patients more cigarettes is morbid, but as I don’t have any cigarettes I don’t expect to find myself in that situation). But lets face it, he who funds has a right to criticize. With skin in the game, how is this meddling?
“HU accepted the prognosis, it was simply a report and strangely, it’s probably more spot on that the HU statistics.” Well, amazing that the ‘IMF always knows best. Hungary must be one of the last few remaining colonies on our planet where the IMF still deserves respect.
Remember, the Latin American nations have gone through their IMF ball-breaking since the 1950s, and lately decided that they will be better off without the IMF meddling in their own internal economic affairs. But as the newfangled, former East Block European colonies go, I guess Hungary is most receptive towards these foreign meddlers, indeed.
“The IMF actually lent money to HU to keep it from skipping off into meltdown.” Yes, and we all know how generous they are, huh? Why are YOU working for them, Rolrox? Why are you defending the IMF so much when the rest of the world knows that they are bloodsucking creeps, giving loans and in turn sucking the life out of their victims?
But I guess you must think the IMF is but a benevolent charity or church or something, hmmm? Weird….
The IMF loans are to ensure that the countries learn their lesson once and for all, and be financially responsible in the future.
Apparently, Hungary didn’t learn anything from the Latin American & Asian experience before them, but wanted to see if it could do one better.
I wonder who’s laughing now!
“The IMF loans are to ensure that the countries learn their lesson once and for all, and be financially responsible in the future.”
DONIZELLI: Well, if you really think that the IMF is the proper judge, jury, and executioner to do this for all independent nations of the world, I do have a wonderful special for you on a slightly used bridge in Brooklyn, NY, USA, My Friend.
“Apparently, Hungary didn’t learn anything from the Latin American & Asian experience before them, but wanted to see if it could do one better. I wonder who’s laughing now!”
DONIZELLI: Let me venture a wild shot in answering that: the IMF?
Donna – Yes, the IMF is the judge, jury & executioner. Whether they are proper or not, I leave that to the idiots who cant balance their checkbooks and go crawling to them.
Say, why don’t you try to sell them that bridge? I’m sure the IMF would give you a good deal on it. They might even put up Hungary as collateral for that bridge.
Who’s laughing? I dont know, but I’m sure I will will be once Orban removes the new property tax.
@Donizelli: As long as the Hungarian state is, under any government (including Fidesz), incabable of balancing its books it will need to justify itself to its creditors. No different from a family that spends more than it makes and needs to borrow cash to get by. Only by ending the chronic overspending will it be free from such meddling. The same, btw, goes for the US, which now must make certain implicit promises to the Chinese, who are to the US what the IMF is to Hungary. Beggars can’t be choosers.
Erik-Beggars can default,fuck the IMF ,Russia did it!
Donizelli you are wasting your time. After Latin America, Asia, Eastern Europe and Russian, people who still say the IMF is there to ensure financial responsibility are either 1. incredibly naïve or 2. work for the IMF 3. sociopaths.
What does a country do if they are financial independent or given loans which are humane. They promote economic stimulus such as investing in infrastructure, like China.
What does a country do if they are debt ridden they have no way out? They sell everything they have and raise taxes. Investing in healthcare, infrastructure and transportation would stimulate the economy, but the plan is that these things become so poor, that the only solution will be to, guess? Yes privatise them. The beauty of this is that the government can say “the IMF made me do it.” The conditions of the loan are secret (democracy!), but the tax hikes are one, and it just came out that another condition is the “restructuring” of the railroad.
This is just a repeat of the 1980′s here, except worse. Technically the IMF has as collateral everything owned by the state. And we are in a serious debt cycle, which is the plan.
@fabian: That is certainly an option, and there would be at least one clear benefit from going deadbeat on the fund and the EU: we would be able to quickly stop worrying about being poorer than the Slovaks. Unfortunately, that would be the case because we’d be too busy worrying about suddenly being poorer than the Romanians and Bulgarians.
Erik: I had to read that twice before I realised that you were trying to be funny.
Currently the Romanian economy is already in better shape than the Hungarian economy. And they have less desperately poor there.
I agree with Fabian. The institutions most responsible for the global crisis, US banks did. And they were even rewarded.
If everyone defaulted at the same time, we would be fine.
Erik, you deplorable, evil pri_ck, why don’t you shut the hell up and instead post more bloggers’ static and/or dynamic IP addresses and places of residence right here on realdeal.hu, you sick, demented puppy.
Tünde, you are quite right about the ‘incredible naive’ (stupid?? and ‘sociopath’ parts (in describing our friend Erik here). So very right!!
I mean… how extremelety demented does someone have to be to come on to this web site and tell the rest of us that the United States of America now has to abide to its new master — the Commie Chinese!? Or else — what!? Plueeeese, Louise…. I call that “incredibly dumb.”
Also, how can someone be so uniformaed as to state that Hungary is better off now than Romania and Bulgaia is? When rather obviosuly Romania and Bulgaria both are doing markedly better already than Hungary does — or likely ever will again. And in point of fact, within a good 2-3000 km range from the national borders of Hungary in any and all directions, ALL NATIONS are doing better than Eurasia’s leading basket case, the Republic of Hungary.
I also agree that Uncle Sam is a helluva worse place now under the yolk of its new Fuehrer, “President” Hussein Obama, than it ever was under the yolk of GWB. I never thought I would have to say that, but it is true, too. Between these two bungling idiots, the country had rung up an almost 12 TRILLION DOLLAR deficit, which is spiraling out of control by the nanosecond.
No wonder that the illegal rulers of Hungary are trying to be chums with “Raggedy Uncle Sammy, the World’s Despondent” — they are really rowing in the same fricking, sinking boat, after all.
Donna – I think you and Tunde (not Erik) are probably the incredibly stupid ones. No one here said the IMF is here to ensure pro-active financial responsibility. The IMF requires that countries that are financially irresponsible adhere to a strict set of rules if it wants to “borrow” its way out of debt. Lender set their rules they want. Borrowers have the freedom not to borrow. Governments are free to release the details. Not many do, as it makes it more difficult to them to achieve their objectives.
Asking the IMF to help a country promote investments in infrastucture or healthcare is especially dumb when the country is in a debt crisis. These take years to materialise, when the country in fact only has days or weeks to survive. I’ve lived in a country which had a debt crisis. Hungary hasn’t seen anything close.
People like Fabian who want to see Hungary default as a solution already have their flight tickets back “home” in their bags.
MC, don’t you be such an Imperialist Imbecile Male Chauvinist Pig, Buddy. Your true (deplorable and unsightly) colors are shining through your hide, My Dear Mister Male Macho Man.
Do you beat up on small children and animals as well, MC, or only on women? BIG MAN!!!!
Now, let’s cut to the chase. For starters, how do you know that fabian has his bags packed and his plane ticket on the ready, Fool? Besides, why do you even suppose that fabian would have to abscond from Hungary if Hungary should decide to tell the IMF where to shove their loan documents. (As I think they should do, anyhow.)
Obviosuly, you had never heard of Latin America and the other continents of Planet Earty, where the deplorably imperialistic IMF had tried, for many decades, to meddle and otherwise interfere in the domestic macroeconomics of various independent nation-states. They were being able to get away for it for long, but after a while, most countries with some brain power in them told the IMF where they can shove it.
Since apparently the modern-era Socio-Communist (Fascist?) regimes “governing” Hungaria have got neither brain power not morals, obviously these sick puppies will fall for any command barked at them by their IMF slave-masters. Hey, as long as the Hungarians are not staging another 1956-style revolution en masse, their puppet masters have got nothing to worry about, right?
Donna – thanks for the compliment. At least I know you’re reading my post.
Fabian doesn’t understand the consequences of a debt default, so he would be among the first to run back to the UK.
YOU (or Fab) can’t even tell us what the negative consequences of default are on the people (let alone the country). I lived in a country which told the IMF to get lost.
Here’s a challenge – why dont you list 3 important things which would get worse (for the people) if Hungary defaulted.
Please define “get worse”.
MC-’run back to the UK?’ unlikely my friend-maybe run over to Russia,I have just returned from business and can see a future possibility.
Default and break the IMF .
Fabian you are on the correct path for your future, Man. And MC — just what sort of a rabid imperialistic relic are you, Good Man?
Anyhow, when I lived and worked in wonderful Mother Russia in the early 1990s, the place was kicking. Already then jam-packed with expat Yanks and Brits, and guess what: none of them wanted to go back to their respective old countries much. They were all rather happy as lark to be in the old “Evil Empire.”
It is amazing that with all the cruelty and incessant meddling that the British and the Americans had done against the people and the nation of Russia (and the old USSR), the Russkies would let them in at all, but they are a very generous and forgiving people, the Russians are.
Nowadays, with the so-called ‘West’ clearly on its knees, barking at eveyone and everything that moves but no longer being able to bite even, the future is only in Russia and China. Latin America is also an attractive option. Once the Western expats get to these countries and get settled in, very, very few of them anticipates returning to the West permanently. What for? What would be waiting for them there these days, hmmm?
@Donna – at least we agree on Russians.
@Fabian – good luck & enjoy.
@Anon- “worse” opposite of “better” ie – Hungarians will get less of what they do want, and more of what they don’t want!
What Hungarians want is not necessarily what they need. The sooner they sort this out, the better.
@Anon – exactly. If you think defaulting is the “soonest” way to sort this out, name the three. Otherwise, we’re probably on the same page.
Free-range capitalism is not for everyone. We have a government to preserve our national assets, not to give them away. If they are unable to manage real estate and other resources, how can we expect them to manage a country? The problem is not state ownership of assets, the problem is that we placed our trust in a bunch of thieving incompetent bureaucrats. We need new management and we need to keep an eye on what they do. If the good people of Hungary elect me king, I’ll show them how it’s done.
You gotta list the 3 things if you wanna be king!
There are no “3 things”. Not one.
@Anon – Take a number. They’re 10m ahead of you who want to be king.