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The different policy alternatives Hungary and Romania
The IMF and the European Commission published final statements after their joint visits Hungary and Romania this week. While both countries have made progress in containing their budget deficits, Hungary received criticism for its unpredictable political environment and its ad hoc fiscal measures, which have adversely affected the investment climate. Such statements highlighted the different policy options adopted by these two economies that share common vulnerabilities counterparts. The reformist agenda of Romania will still set by the IMF, as the government seeks to obtain a new loan program. Meanwhile, improved risk environment globally is easing external financing risks in Hungary, while moving away from the authorities initially requested loan agreement in 2011. However, structural vulnerability, compounded by unpredictable political environment, make Hungary is exposed to heavy investment of capital flows in the event of worsening global sentiment.
By Jelena Vukotic.
Source: El economista
