Portfolio blogger

Wednesday, November 23, 2011

What is the use of the IMF for Hungary

Looking at the path the Hungary has followed, it appears that turning to the IMF is just the continuation of a strategy, however abrupt a change it seems to be. By distancing i tself from the IMF the government got the necessary freedom of maneuvre to take the steps necessary to build its power base, occupy all institutions and prepare to make the next government a lame duck using the occupied positions. Also, it benefited from some "non-orthodox" steps and thus installed the mechanisms to favour its clientele and the party itself in distributing the financial resources of the budget. This almost brought the coutry to the brink. The sole announcement that it re-starts negotiations with the IMF has stopped the free fal of the forint and may enable the financing of the budget, independently whether an agreement will arrive or not. By this, the consequences of its past steps can be avoided - if not, Hungary is worse off also.
Another way to avoid consequences is a sentence hidden in the law containing the transitional regulations for the new Constitution. This law has been submitted to the Parliament by two members - I may return to this in a later post.