I have written the other day about the special loan(s) offered to Hungary to fight the financial crisis. Now I finally managed to find numbers about the size of Hungary’s budget to put things into perspectve. And it made me speechless. The annual Hungarian state budget has a size of around 50 bn Euro (s. their national office of statistics). Now with a loan of around 20 bn Euro (plus the extra 5 bn from the ECB) this counts for 40% of Hungary’s budget. Have I ever seen anything like that?!!!
The financial crisis is far from being over, but what is interesting is that governments and the EU Commission are getting more innovative in using all means at their disposal to fight back. Commission President Barroso is announcing a “comprehensive European Union recovery plan ” for 26 November. If this will go as far as the Delors plan from early 1990s is another question though.
What really surprised me, however, was the reaction to the crisis in Hungary. Undoubtedly, after the first shock wave has dealt (well…?) with by the big western member states, it became high time to turn east now. Here Hungary is worst hit so far, so a massive rescue package has been prepared over the last days (read FT). It consists of 12.2 bn Euro from the IMF, 1 bn Euro from the Worldbank (the already provided 5 bn Euro credit from the ECB) and 6.5 bn Euro from the EU. Now the latter point is really interesting because the EU is invoking article 119 to step in. Even more surprising to me is the (first ever?) issueing of “Euro bonds” to finance the EU’s side of the Hungarian rescue package. Making use of such bonds has long been the demand of UEF. But their consideration were circling more around a general infrastructure back-up and investment programme and less of a concern for crisis intervention. If the bond move works out, it could set a worthy precedence for future intervention.
Die Ratsverordnung “zur Einführung einer Fazilität des mittelfristigen finanziellen Beistands zur Stützung der Zahlungsbilanzen der Mitgliedstaaten” ist hier als PDF verfügbar.