Hungary and the EU/IMF

Hungary is in open conflict with the EU and the IMF about its finances. Panic in the financial markets may follow.

After the economic crisis Hungary, just like many East-European countries had gotten loans from the IMF and the EU in exchange for economic austerity. They obediently did it, but it wasn't popular: last elections the sitting government was routed, the main opposition party got two thirds of the vote and a right extremist party got much bigger.

The new government wants to slow down the shrinking of the budget deficit (still 3.8%) and the EU and IMF understandably said "no". But they also said "no" to new taxes on the banks or rich citizens under the pretext that they would harm growth. Instead they said that the only way allowed to reduce the budget deficit is "cutting public services and privatisation.".

This is pure nonsense. Economists don't agree on those issues. Many privatizations have ended up harming growth and costing the public more. And Western Europe and the US have surprisingly little to show for the lenient ways in which they treated their rich citizens in the last decades.