Hungary Minister: IMF Talks Break Off On Lack Of Austerity

Wall Street Journal ^ | 19 July 2010 | Margit Feher

[Erik Latranyi]

BUDAPEST (Dow Jones)--Hungary's talks with the International Monetary Fund and the European Union broke off Saturday as the government refused to implement fiscal austerity measures to reach this year's budget deficit target, Economy Minister Gyorgy Matolcsy said Sunday.

"We said that further austerity measures cannot be carried out...That's the problem that we are in the fifth year of austerity measures, that's why we are where we are," Matolcsy said in an interview on private television channel HirTV.

The IMF and EU walked out Saturday from their latest review of Hungary's 20 billion Euro credit line that would allow the country to draw on the remainder of its credit, which will expire in October.

The IMF said Hungary continues to face fiscal challenges and should present sustainable and structural means of reducing its budget deficit.

Instead, Hungary wants to levy an extra financial-sector tax to cover most of the missing revenues to meet this year's budget shortfall of 3.8% of gross domestic product.

"The (IMF and EU) partners didn't accept this view. They are in favor of this peculiar austerity policy,"

Matolcsy said. Should there be "no bank tax, the IMF suggested the launch of a Romanian or Ukranian-type set of austerity," Matolcsy added.

[Erik Latranyi]

Socialists cannot cut spending even when faced with oblivion.

[SMARTY]

What I have to say is something that comes to my mind every time I hear mention of Hungary or Hungarians. Maybe it does not apply, but anyway....

I grew up in an ethnic neighborhood. It was mostly Serbian and Hungarian, with some Irish and Italian. But it was mostly Hungarian.

In my entire life I have NEVER met more thrifty, frugal and clean-living people than Hungarians. Every one of them was industrious to a fault and squeezed ever possible advantage out of their situation. They would NEVER buy anything they were able to make. They ALL kept gorgeous and fruitful gardens... I have NEVER seen anything like what these people could do with a small patch of dirt.

Their flower gardens could surpass anything in any greenhouse or showroom. No one could grow cherries or tomatoes, beans, etc. like they did.

Of all people, if they are so frugal, how could this happen to them!

[vanilla swirl]

“Of all people, if they are so frugal, how could this happen to them!”

The type of Hungarians you grew up with may not be who actually lives in Hungary now.

[Erik Latranyi]

Of all people, if they are so frugal, how could this happen to them!

50 years under communism creates people that are dependent and ill-equipped for competition.

I can tell you from my travels that the younger generation is a dependent class (not all, I have met some ambitious youth, but they want to come to the US for opportunity) that votes for more socialism.

Once given the gov't teat, it is difficult to wean people. Just think about how difficult it is for us to turn social security into a private system.

[SMARTY]

You are right. The old folks I knew were so glad to be here and had left behind such abject privation and poverty, that they got along fine here because they knew how to work and asked for NOTHING. They were fiercely independent and proud!