Hungary: junk status

„Viktor Orban, the prime minister, has repeatedly insisted on Hungary’s right to follow independent economic policies, despite criticism from European Union partners, banks and investors. Foreign banks, which dominate Hungarian banking, are particularly incensed by a law forcing them to accept some of their clients’ losses on foreign exchange mortgages.

They are generally reviewing their Hungarian businesses and reducing exposure.  Vienna-based Raiffeisen Bank International on Wednesday blamed Hungary for contributing to a sharp downturn in profits in the third quarter and said its Hungarian business was under review.

Orban has reluctantly gone to the IMF having last year declared the Fund wasn’t needed in Hungary after an earlier rescue programme was completed. Even when asking for new talks with the IMF, ministers have said they won’t be abandoning key elements of existing economic policy. No wonder investors are so jittery – and the forint is tanking.”