With attention fixed on every twist and turn in Hungary’s talks with the IMF, it’s easy to forget why the government first raised the prospect of assistance nine months ago. In short, while the fiscal position is not too bad, wider economic frailties and unpredictable policymaking have pushed up risk premia. Accordingly, while an IMF programme may help to bring down borrowing costs in the short term, it will only help in the medium-term if it acts as an anchor for economic reform and a shift in policymaking.
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