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Government U turn as Hungary goes cap in hand to IMF

Government U turn as Hungary goes cap in hand to IMF
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In Hungary its been confirmed the centre right government wants financial help from the International Monetary Fund.

The move is a U turn by Budapest after its stated opposition to working under the international lenders guidance.

A previous loan expired last year and the government set out to pursue its own policies. A weak economic outlook and the threat of a debt downgrade are believed to be behind the change.

“It was the only good solution for the government in this situation because we could see that there were problems with selling the bonds in Hungary. On the other hand, on the domestic political level its the biggest defeat of the government since its inauguration,” explained Peter Kreko of Political Capital

The economy still carries the scars of a 2009 recession which pushed unemployment into double digits after austerity measures were introduced in return for 20 billion euro bailout from the IMF and EU to save the country from collapse. Hungary has its cap in hand again.

“This is a huge turn, a 180 degrees turn. I have to admit that I was very surprised to hear it. I really welcomed the announcement last August when Hungary broke with the IMF but now I am disappointed and I don’t think it will end well,” said Nora Vezer of Budapest.

Christine Lagarde, the Managing Director of the IMF said they plan to treat as, ‘precautionary’ any support that could be available.

Analysts believe Budapest could face tough talks if it wants a deal without strict conditions attached.