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Economic Hardship

According to a 2009 poll, a half a year before the “voting booth revolution,” 72% of Hungarians actually felt to be worse off economically than under communism. Ninety-four per cent described the country’s economy as bad, and 42% disapproved of the move from a state-controlled economy to a market economy (Pew Global 2009; Wike 2010), even though in 1991, 80% answered just the opposite to the same question (Wike 2010). Not only have Hungarians felt as though they have been the losers in the political transition to free market democracy, but also, as Hegedus points out, though Hungary carried out widely recognized economic reforms during the late state socialist era and was the first post-socialist state to pave the way for liberal economic reforms in East Central Europe during the 1990s, in the 2000s its competitiveness continuously decreased. The country’s external debts and economic imbalances soared during the first decade of the new millennium (Hegedus 2014, p. 3; Eurostat 2016; Knoema 2016). In 2010, Hungary’s GDP was further from Austria’s (the former sibling-state apropos the Austro- Hungarian Monarchy, dismantled in the post-WWI treaties) than it was in 1990 (Lambert 2015, p. 9). Since 2002, government gross debt as percentage of GDP has grown by approximately 3% annually, from a level of 55.9% in 2002 to 58.6% in 2003, and 82.2% in 2010 (Hegedus 2014, pp. 4-5; World Bank 2016). In the years 2002-2008, the budget deficit varied between -5% and -9% annually and all initiatives to create structural reforms and restore the balance of public spending remained unsuccessful. This was partly due to the then-opposition FIDESZ torpedoing education and healthcare reforms with a “social referendum” in 2009, which pressed the government to suspend the system of individual financial contributions to healthcare and higher education. Thus, by the time when the economic crisis hit, Hungary was greatly in debt both in the public and private sectors, and was without feasible crisis management strategies (Hegedus 2014, pp. 4-5). Additionally, the lack of appropriate structural reforms led Hungary to lose its earlier competitive advantages over other post-socialist states in the region (p. 6). Being in public and private debt, as well as a structural economic and competitiveness crisis, Hungary was hit hard by the global economic crisis and was endangered both by the collapse of the national currency the forint (HUF), and in 2009 by state insolvency (World Bank Group 2016; INSOL). Before Orban’s takeover, his predecessors focused mainly on spending cuts and the securing of the IMF- EU-IBRD loan package amounting to approximately 20 billion euros for 2008 (International Monetary Fund 2008).

 
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