THE WALL STREET JOURNAL: BUDAPEST—Hungary's government said the International Monetary Fund and European Union are ignoring the economic risks of excessive austerity measures and that Budapest can't make deeper spending cuts now, despite a punishing reaction from markets after bailout-loan talks between the two sides broke off this weekend.
The Hungarian currency, the forint, on Monday fell to its lowest level against the euro in more than a year, and the cost of insuring Hungarian government bonds against default jumped sharply after the IMF and EU walked out of talks with Budapest on Saturday, saying the government wasn't doing enough to shrink its budget deficit.
Anxious investors also pushed down the currencies of Hungary's neighbors Poland and the Czech Republic. In the wake of serious debt troubles in Greece, which have prompted Europe-wide efforts to shore up confidence, markets have focused on governments' commitment to strengthening their finances and reining in spending.
"The pressure is clearly going to remain on for some time," said Robert Beange, a senior emerging-markets strategist at Royal Bank of Canada in London. "The markets really want a deal" between the IMF, EU and Hungary. >>> Gordon Fairclough and Margit Feher | Monday, July 19, 2010
