Blowback For Hungarian Financial Misstatements

You might have become aware late last week of a brief kerfluffle involving the new Hungarian government of Prime Minister Viktor Orbán. It didn’t involve Orbán directly, however, only some figures closely associated with him, such as another top figure in his FIDESZ political party, Lajos Kósa (mayor of Hungary’s second city, Debrecen), and Péter Szijjártó, his government spokesman, who together spread the word to the world at large that the Hungarian budget deficit was actually rather higher than previously reported and that their country could soon find itself in a simlar fix as Greece. This quickly led to a mini-financial panic breaking out the world over – including in Far Eastern markets, which suffered price-losses – at the thought that the EU suddenly had another fiscal basket-case member-state to deal with, one that moreover had already had a joint EU/IMF bail-out back in 2008.

“Sorry – did we say that? We weren’t really serious” was roughly the reaction from that same Hungarian government once they realized the wide-ranging storm their comments had unleashed. Clearly, the amateurs were now in charge within that government’s highest reaches, and you can get a quite informative treatment of the incident – with pictures of the major protagonists – from the realdeal.hu weblog. There writer Erik d’Amato makes a convincing case that all this was simply an attempt by the new government to position itself politically to impose some austerity measures in its upcoming budget, albeit one that went spectacularly awry.

But such incompetence cannot go unremarked upon for long, and as the Danish daily Politiken reports (Hungarians go off on top politicians’ mysterious pronouncements) feedback has now started to arrive. For one, the economics editor of one of the major national dailies, Zoltán Baka of Népszabadság, called last week’s pronouncements “completely idiotic.” The IMF chief, Dominique Strauss-Kahn, also told the Associated Press that, in his view, there is “no basis to be worried” about Hungary’s fiscal situation. Other European finance ministers, however, couldn’t be bothered to offer an opinion: they are busy these days trying to find a solution to the ever-weakening euro, whose recent downward course last week’s Hungarian mini-fiasco only served to accelerate.

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