Possible scenarios still range from quick IMF deal to no deal, says City


Possible scenarios for Hungary's planned IMF/EU financing package continue to range from a deal secured before the second half of this year to no deal at all, London-based emerging markets economists said on Friday.

In its CEEMEA Macro Monitor report released to investors in London, Morgan Stanley sketched out three scenarios with "subjective" probabilities attached.

In the best, "bull case" scenario that carries a "subjective probability" of 25% Hungary "gets the all-clear" from international lenders and formal negotiations on a new IMF/EU financing package can start "very soon", and Hungary could see a package announced by mid-year.

In Morgan Stanley's "base case" scenario, with a "subjective probability" of 40%, there remain "sticking points", but progress has been made. In this case, Hungary has not cleared 100% of the issues but has done just enough to at least start the official talks.

It is possible that a few changes may be required to the MNB Act or to the judiciary, which would further postpone the official start of negotiations. The official talks could therefore begin "some time in May/June" and the assistance package eventually gets announced by July-August.

The worst, or "bear case" scenario – "subjective probability": 35% - could see the EC sending two of the outstanding issues to the European Court of Justice, resulting in the talks breaking down, and the deal getting delayed "indefinitely". Also, the ECB could issue a negative opinion of the proposed MNB changes, which would cause a further delay, rendering formal negotiations unlikely to start.

Also, under this scenario, if risk appetite is sufficiently benign, there is a risk of Hungary pulling out of the talks entirely on the grounds that it can fund itself on the market even without a safety net.


Századvég raises GDP forecast to 7.8% Analysis

Századvég raises GDP forecast to 7.8%

Opposition parties to begin PM candidate primaries Elections

Opposition parties to begin PM candidate primaries

Tungsram switches to hybrid work HR

Tungsram switches to hybrid work

Budapest leaders make public transport free for under-14s City

Budapest leaders make public transport free for under-14s


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.