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Washington Post: Hungary is EU's first case of budget cutting fatigue

"Is Hungary suffering Europe's first case of budget-cutting fatigue?" asks the Washington Post in a Thursday evening article (US time). The newspaper calls Hungary's conflict with the IMF "the most direct challenge yet to the IMF's call for European governments to curb their high levels of debt."

Countries like Greece and Spain are only in the beginning stages of deficit-cutting, while others like Latvia have hewed closely to IMF guidelines since appealing for help early in the recent economic crisis. The Post thinks that the turn of events in Hungary may expose the limits of the process in Europe's topsy-turvy political landscape. The continent's socialist parties have become the chief deficit hawks in several countries – and in Hungary's case were ousted by a center-right leader, Fidesz Prime Minister Viktor Orbán.

The Post sees the Prime Minister's steps against the IMF (he's hinted that Hungary would not necessarily need a new loan or to take further money out of the existing agreement, so it would not consider IMF's suggestions for next year's budget mandatory) as a calculated gamble taken with one eye on upcoming elections and another on the fact that the IMF program was in its latter stages anyway.

Much of the money under the roughly $25 billion IMF-led program has already been disbursed, and Hungary has said it probably does not need the rest. The country has met the interim targets for deficit reduction it negotiated with the IMF when it appealed for help in 2008. But the agency has been pushing for more, and after failing to reach agreement with Orbán's government over further deficit cuts – and raising particular concern that the proposed bank tax would undercut the country's weakened financial industry – a fund team left, the Post explains.

"We will have a single demand, namely that of equal treatment, that is, the same time frame must be set for all to meet the E.U.'s expectation," Orban said in a speech to the parliament in which he called on the country to take back its "economic sovereignty," the Post reports. (BBJ)