The news that an IMF delegation headed by Dominique Strauss-Kahn himself would visit Budapest today reached the Hungarian media on January 9. Origo, an Internet paper, reported it first. The news item was based on a press release by the International Monetary Fund. The press release didn't reveal details of the visit except that Dominique Strauss-Kahn, managing director of the IMF, "will visit Budapest on January 13, 2009 to discuss with senior officials the global economic environment and Hungary's progress on the IMF-supported economic program." It also mentioned that in addition to Prime Minister Ferenc Gyurcsány, Finance Minister János Veres, and Central Bank Governor András Simor "he [was] also scheduled to meet with the leader of Fidesz, Mr. Viktor Orbán, a group of legislators, and several other prominent representatives of Hungarian society." This brief description didn't quite satisfy the editors of Origo. Perhaps, they said, the IMF is dissatisfied with Hungary's economic program and perhaps its negative attitude weighed on the Hungarian forint. The next day, on January 10, Portfolio, another Internet paper dealing with finance and the economy, headlined its article on Strauss-Kahn's visit: "Did the Dissatisfaction of the IMF Drag Down the Forint This Week? The Answer Will Come on Tuesday."
Interestingly enough no other paper picked up this juicy story in the next couple of days. However, early on January 12 Tibor Navracsics, the leader of the Fidesz parliamentary delegation, wrote a blog on the subject. He referred to the Origo article and repeated the "worry of some analysts" that the drop in the Hungarian forint has something to do with the IMF's dissatisfaction with the Hungarian government. He claimed that Strauss-Kahn was coming to Budapest not to discuss the general economic situation and to talk about Hungary's progress on the the IMF-supported economic program, as the press release stated. Rather, he assumed that the trip was prompted by dissatisfaction with the Hungarian government. But Navracsics was cunning enough to cover himself in case it turned out that Hungarian financial analysts were wrong and that the IMF was quite satisfied with the Hungarian government's performance. He therefore resorted to a favorite Fidesz theme: one socialist scratches the back of another socialist, to paraphrase the English saying. After all, Dominique Strauss-Kahn most likely is coming to talk with old friends. Strauss-Kahn was "an old and trusted member of the French Socialist Party, finance minister in the Jospin government." And he continued: "He must be just as familiar to the Hungarian negotiators as Joaquin Almunia, financial commissioner of the European Union, who as a socialist politician filled several ministerial positions in the Spanish government." Anyone familiar with the Hungarian scene can immediately translate that. Almunia helped the Hungarian socialists in 2006 when he postponed a final convergence proposal from the Hungarian government after the Hungarian national elections. The socialist Almunia helped Gyurcsány, the socialist prime minister, and perhaps Strauss-Kahn will similarly help him although he and his government didn't fulfill their obligations vis-à-vis the IMF.
But that was nothing in comparison to an article that appeared yesterday in Index, another Internet newspaper with a large readership. I must say that Index is not my favorite source of news and I hope it will soon be clear why not. The author, Roland Baksa, suggested that the Hungarian economy was in a death spiral and that the IMF was intervening to protect its loan. The headline was: "The IMF is Expecting the Introduction of New Restrictions or Will Withdraw the Loan." Baksa claimed that the Hungarian government already knows that there will be a 200 billion forint shortfall next year. Referring to "experts" who refused to give their names, he said that the deficit would be larger in 2009 than in 2008. In fact, the Hungarian situation is so dire that the IMF abandoned its normal schedule that would have monitored its loan to Hungary in February and came a month early. According to the anonymous experts Strauss-Kahn will make the Hungarian government choose: either further cuts or return the IMF funds.
This morning István Hamecz, an economist who is closer to Fidesz than to MSZP, repeated most of the "facts and figures" of the Baksa article. He appeared on ATV's morning interview program and, after listening to him, I wouldn't be at all surprised if he were one of the anonymous experts. He claimed in this interview that the projected deficit (2.7%) is in danger and hence the weakening of the forint. He also talked about the 200 billion forint shortfall and predicted that there will be further restrictions that will certainly hurt the country's economic recovery. According to him Strauss-Kahn's visit to Budapest "shows the seriousness of the situation."
That was this morning before Strauss-Kahn met with Gyurcsány, Veres, and Simor. At it turned out, most of the dire predictions about the IMF's dissatisfaction with Hungary's performance turned out to be baseless. Tomorrow I will tell the next chapter of the story. (Unfortunately, these stories never end.)