Hungary defies IMF in adverts before talks on aid package

Thu, Oct 11, 2012, 01:00

HUNGARY HAS screamed defiance at the International Monetary Fund in full-page adverts placed in major national newspapers ahead of an expected resumption of talks on a new aid package for the heavily indebted country.

Under the heading “Government Information”, the notices include the slogans “We will not give in to the IMF!”; “We will not give up Hungary’s independence”; “What do we want from the IMF? Respect, trust!”; “Property tax. No!” and “Cuts in Family Benefits. No!”

The adverts, which are part of a €700,000 government media campaign, chime with prime minister Viktor Orban’s efforts to portray himself as defender of the nation from rapacious markets and interfering foreign institutions.

He has railed against EU criticism of his policies and, soon after coming to power in 2010, he broke off talks with the IMF in protest at the conditions it attached to aid.

Mr Orban insisted he would restore his country’s financial sovereignty and not take orders from abroad, but his failure to reinvigorate the economy forced him to approach the IMF last year for a precautionary credit deal of some €15 billion to reassure markets of Hungary’s stability.

Since then Mr Orban has delivered conflicting signals about his willingness to secure an IMF “safety net”, on the one hand saying the government wants a deal but on the other rejecting the IMF’s supposed conditions and insisting Hungary can manage without a credit line.

“We can stand on our own feet, but for us to be safe if external conditions take a turn for the worse, we would like an agreement with the IMF,” government spokesman Andras Giro-Szasz said yesterday.

He also insisted that “the government is not fighting against the IMF in its advertisements” but delivering “realistic messages” to Hungarians about the possible substance of IMF talks.

Mr Orban has nationalised the private pension system and imposed heavy taxes on banks and other sectors to boost state coffers. However, the economy is shrinking and government debt is still the highest in the region at 79 per cent of GDP.

Tim Ash, an analyst at Standard Bank in London, said investors feared Mr Orban might clinch an IMF deal and then borrow heavily on the markets at favourable rates before becoming “more belligerent with the IMF through the review process” ahead of 2014 elections.