IMF pushes stand-by loan idea for Hungary

Are IMF and Hungary really talking about such different things? Couldn’t it all just be pre-negotiation banter, ahead of a deal that was always going to happen? Prime minister Viktor Orban may have put out a rather defiant-sounding list of items that are not on the table for the Hungarian government, but when it comes down to it, the IMF doesn’t seem to be asking for that anyway.

Instead of slicing more costs from the budget, it wants Hungary to commit itself to growth policies and a pro-business approach. Now, this sounds benignly positive, but it’s likely a veiled criticism of the ad-hoc series of taxes and special charges that have been levied on various sectors and businesses. And you can’t help thinking about all the strategic companies (oil, gas, water) that the government in Budapest seems to want to take back into its control through buy outs. The IMF’s point seems to be that Hungary needs to rebuild corporate confidence with greater predictability in policies.

Completing a deal with the IMF would do a great deal to solidify confidence in Hungary’s economy, and its government. What remains to be seen is if Orban thinks he has enough political capital to spend on such an agreement.

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