Greece, Hungary and the IMF

Developments in Hungary over the past few days constitute a serious warning for Greece. The recently elected government of Prime Minister Viktor Orban – which rose to power on its promise to withdraw the central European nation from a further loan deal it was to have signed with the International Monetary Fund and the European Union – has taken the risk of making its austerity-defying pledges a reality. Yesterday, the country did not succeed in borrowing the amount it had planned to on financial markets, while the money it was able to raise came at a hefty interest rate. The European Bank for Reconstruction and Development has warned of the risk of contagion from a sell-off in Hungary after the administration’s negotiations with the IMF and EU were suspended over the weekend. Those in Greece who still insist that there is a different path to that of fulfilling the rules under the EU-IMF memorandum ought to take a closer look at developments in Hungary from now on.