Hungary: going it alone?

"The only thing clear is that Budapest’s position is on the move again. This is hardly news – Budapest has been playing hot and cold with the IMF for months. What’s new, perhaps, is the advent of QE3 and the floods of liquidity it has already unleashed on global markets.

Hungary’s government may well feel – as Quijano-Evans suggests – that market conditions are ripe for a timely eurobond issue and, with it, a cheeful snub to the IMF. That would play well to the political gallery, where Viktor Orbán seems happy to make an enemy out of the IMF – one that he would no doubt be happier still to vanquish in public.

But suppose Hungary goes ahead with a eurobond issue and market conditions subsequently change? A later deal with the IMF would not necessarily be ruled out. But investors might be a lot less sanguine about its chances of success."