“In 1945 the country’s infrastructure had to be rebuilt, in 1989-90 the political and social system and in 2010 the economy,” Prime Minister Viktor Orbán said as he outlined the concept for the New Széchenyi Plan on Wednesday.
Orbán said the plan is no less than a programme for rebuilding the economy.
“Hungary’s current financial position is stable and predictable and provides a good basis for the government to continue structural reforms and kick-start economic growth. At least Ft 1,000 billion will be made available between now and 2013,” he explained.
Speaking to entrepreneurs at a function, Orbán claimed that the 29-point action plan had “managed to stave off the spectre of budget collapse” adding that “without that this year’s 3.8% budget deficit target would not have stood a chance”. The country can adhere to the 3.8% budget deficit, he underlined.
“The economy is on a solid footing without the IMF. The stability of Hungary’s economy is reflected by the fact that the suspension of the talks with the IMF and the subsequent downgrades caused only temporary disruptions,” he argued.
“There will be further downgrades,” Orbán said, “but they will have only temporary effects on the forint’s exchange rate and the country’s bond-issuing and bond-selling capacities will return to a level at which Hungary’s operation can be regarded as stable,” Orbán added.
“The economy is on a solid footing without the IMF”
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Wow, that went fast from the situation around the elections?
Clever people those Fidesz-guys…
-
They seem to have some problem spending the money from this Széchenyi plan.
We asked around a few banks and of course a typical foreign bank wants to borrow us some million forints without interest.
The typical Hungarian banks did not seem to bother, they are probably busy distributing the funds internally…
So my advice is to hurry up, good loans available at the moment, before they run out of funds
“”There will be further downgrades,” Orbán said, “but they will have only temporary effects on the forint’s exchange rate and the country’s bond-issuing and bond-selling capacities will return to a level at which Hungary’s operation can be regarded as stable,” Orbán added.”
Orban is a real prophet now. But the fact is, that even if the reputation of rating agencies has suffered, their recommendations still hold a serious power in market environment. Downgrades in ratings of two most regarded agencies that Orban claims to be as certain, will almost reflect in weker refinancial capacities of Hungary.
Standard & Poor’s is currently rating Hungary at its lowest investment grade and with further downgrade it will send Hungary’s issued bonds to junk – non investment speculative band where they were last time in 1996. Many important investment vehicles, such as pension funds or even some mutual funds, are forbidden to invest in securities that are out of investment band. Such downgrade will almost certainly be projected in lower demand for Hungary’s issued bodns and will push their interest rates higher, so they could compete with the bonds of the countries like Greece, Turkey or Vietnam. Today Orban seems to care little about what these agencies do. But he’s missing that ingoring them means also ignoring the markets of which he still somehow irrationaly expects more recieving attitude.
The reason the exchange rate did not deteriorate is because the market believes Orban will have to cut a deal after the October elections.
The market does not believe Orban will go it alone …
Since the EU and the IMF represent a united front, the expectation is that Orban will essentially capitulate.
We know the end game …
“the market believes Orban”
No, it’s not.
Show us Bob why …
The problem is that you have shown yourself incapable arguments to back up your positions.
“Show us”
Who the hell do you call “us”?
DO you represent an entire group of dimwits?
A Very lucid statement:
“No, it’s not.
Bob at July 31, 2010 10:25 PM ”
Brilliant!
”
“Show us”
Who the hell do you call “us”?
DO you represent an entire group of dimwits?
Bob at August 1, 2010 3:51 PM”
I am waiting for your reasoning, ‘Nagy Bob’ …
“I am waiting for your reasoning”
You first.
Quickly, before Hungarians kick you out of their country.
”
“I am waiting for your reasoning”
You first.
Quickly, before Hungarians kick you out of their country.
-Bob”
For exercising liberty of expression? Sounds pretty backward to me …
@AiB:
After a while on this site you should get used to these threats like
“Quickly, before Hungarians kick you out of their country.” …
The funny thing about these is, that usually they are written by the mü-magyars who don’t even live in Hungary …
Welcome to rhe club!
“the market believes Orban”
No, it’s not.
Bob at July 31, 2010 10:25 PM
—
Should that not be:
‘No, it does not’
?
An insight gained from an Economist article a
couple/few weeks back suggested that one reason HU
is still able to sell its bonds has less to do
with the IMF or spectre of downgrades. Rather,
they pointed out that there aren’t enough
destinations with significant yields. With HU,
offering double Germany (3.3 vs 7.7), the country
can still attract.
However, as somebody else recently pointed out,
without an IMF endorsement, HU has to pay more.
That “more” will hurt in the longer term when
others are paying 3.5% for money HU borrowed at
7+.
It’s therefore, not a question of the market
believing Orban. It’s more a question of can I
park money here – and then sellout before the HUF
slips.
Rolrox,
I find it very hard to believe that the market thinks Hungary will be able to avoid borrowing further from the IMF or at least obtaining a credit line. The economy here is mired in recession.