HUNGARY STARVED OF FUNDS
By David Vance On January 18th, 2012 at 8:49 amA minor European war has broken out but it doesn’t seem to get much media profile;
“Hungary’s defiant premier Viktor Orbán has no hope of securing vital funding from the EU and the International Monetary Fund until the dispute is resolved, leaving him a stark choice of either bowing to EU demands or letting his country slide into bankruptcy.
Yields on Hungary’s two-year debt jumped to 9.17pc on Tuesday, an unsustainable level for an economy in recession with public debt of near 80pc of GDP. Hungary’s debt was cut to junk status by rating agencies last week. Capital Economics said Hungary must repay €5.9bn (£4.9bn) in EU-IMF loans and raise external funds equal to 18pc of GDP this year, the highest in Eastern Europe. Two-thirds of household debt is in Swiss francs, leading to a lethal currency mismatch as capital flight weakens the forint. “Hungary is playing with fire,” said Lars Christensen from Danske Bank. “The EU is not bluffing. It will let Hungary go over the edge to make the point that EU countries must play by the rules. Our worry is that Hungary’s government has not yet got the message.”
But EU countries do not play by “the rules” when it suits them and it seems that Hungary has been singled out for some tactical Euro-bullying. The message is that Brussels will control every Nation State and Hungary is expected to be starved of funds unless it submits to the EU. The tyranny becomes more overt by the day.