Hungary made Monday a U-turn in its "war on debt" Monday, giving itself five more years to comply with a new constitutional rule despite approaching the International Monetary Fund for help. Under a new constitution to come into force on January 1, Hungary is obliged to cut its national debt to less than 50 percent of output, but a new bill tabled late Sunday postpones having to comply until 2016.
Hungary last month asked the IMF for assistance following a damaging and sharp fall in its currency the forint, with Prime Minister Viktor Orban's unorthodox economic policies coming in for widespread criticism. Moody's cut Hungary's rating to junk status on November 23, and the central bank raised interest rates by half a point to 6.50 percent on November 29 in an attempt to prop up the currency.
The new bill "is nothing else but the immediate surrender of the second Orban cabinet in the war they launched themselves," political analyst Gabor Torok said. With the near-nationalisation of 11 billion euros ($14-billion) in assets from the private pillar of the pension system, Orban cut debt back to 77 percent of gross domestic product (GDP) from 81 percent by June.
In September, he then called for further austerity measures so that Hungary could meet its target of trimming the debt to less than 70 percent of output in 2012, and to the EU ceiling of 60 percent in 2014. The parliament, where Orban's Fidesz party has a decisive two-thirds majority, was due to start discussing the proposal on Thursday.
Comments
Comments are closed for this article.