Since most of the opinions were purely political it would be worth concentrating on the economic aspects of this problem to facilitate a better understanding of the political debate. The starting point is that IMF credit is only for ‘misbehaving' countries and in the last thirty years Hungary has proved itself to be just that. ‘Misbehaving' countries turn to the monetary fund because they are not able to manage their debts through the markets, while market players do not regard policies that are not suitable for guaranteeing the repayment of credit as credible. Since the only countries that turn to the IMF are those whose management of their economic affairs has proven to be inadequate, it is not surprising that they have to surrender part of their economic sovereignty in return for the credit they are granted, since for the creditor this is the only assurance that failed policies  will be changed.    

Economic policy is more politics than profession and the IMF is not a value-neutral, charitable institution but an organisation that mediates the interests of its owners. Therefore, the conditions set by the IMF are usually political and do not take only the interests of the borrower into account. There is no conspiracy in this. Whoever does not wish to receive credit under such conditions must pursue economic policies which ensure that the need to turn to the IMF for help does not arise. In this sense the government's decision to not continue cooperation within the formal framework of the credit agreement may be regarded as promising. However, it is disturbing that the government previously took up a different position and the market communication of the present decision was not the most successful one. This would indicate that the decision was not necessarily well thought out and strategic but rather a move that was forced by the tactical situation. 

In respect to the international circumstances, the original credit agreement barely contained any structural conditions - which is a deviation from the norm. It merely established the deficit level.  In the meantime even this changed, perhaps explaining why the new government was able to believe that the figures were not set in stone. Based on the information available, it appears that in the last negotiations both parties left the technical framework of the agreement.  However, this led to a situation that can be described as "an attempt to debate by unsuitable entities". In relation to the bank tax the IMF proposed unambiguously political, and definitely new, requirements, while the Hungarian government wanted to negotiate next year's target deficit, for which the IMF-EU staff was not authorised, as negotiations on this may only be carried out with the Economic and Financial Affairs Council. Since the parties conceded they are not willing (the government) and not capable (the IMF-EU delegation) to pursue a debate on these issues, the negotiations were brought to a close and in future will continue in suitable EU forums.

What will the consequences of this be for the economy? This depends upon how well the government is able to communicate to the markets that despite the breakdown of the negotiations the financial situation will not deteriorate, that it is capable of managing fiscal processes, and that this is why it does not wish to accept the political costs or stigma of accepting the new IMF agreement. This strategy may be viable but it is not without its own risks. It is not only necessary that the government clarifies what kind of credible strategy it has to be able to consistently raise the country out of a regularly reoccurring debt crisis. It is also important that in the short term (until the credibility of the government has increased) a new crisis does not develop in the world economy, since, as a rule, it unavoidably makes the financing of "misbehaving" countries an impossibility. Early signs indicate that the markets have confidence in the success of the strategy; however, this still requires sound plans, credible communication and even a measure of good luck.