NEW DEBT TRAP FOR HUNGARY

There is more and more similarity between the Hungary of the late ’eighties and that of today as there is an increasing debt service with the burden of interests, with banks getting richer by giving loans, claim experts. The situation is also similar because one of the leaders of the country was Péter Medgyessy at that time, too.

The case is similar because before the change of regime there were also Far Eastern financial institutions which gave loans. On Monday the State Debt Management commissioned the Daiwa and Nomura banks to organize issuing bonds in the value of 50 billion yens for a 5 year term period. In the financial plan of Hungary there is altogether three billion euros to be taken from external sources instead of the 2 billion euros of last year. Experts say that another similarity is that loans are taken in currencies which are expected to strengthen in the long run so the loans will mean an additional burden for the budget.

Translated by Péter Szentmihályi Szabó