Petőcz Kálmán (szerk.): National Populism and Slovak - Hungarian Relations in Slovakia 2006-2009 (Somorja, 2009)
Zsolt Gál: Argentina on the Danube - Populist Economic Policy as the Biggest Enemy of Sustainable Economic Growth
Zsolt Gál state sector instead of more efficient investments (i.e. developing infrastructure, improving the quality of business environment or supporting education, research and development). Perhaps even more illustrative of ineffectiveness and harmfulness of fiscal expansion was the populist cycle in Hungary between 2002 and 2007-2009. Before the 2002 elections, two principal political forces in the country, namely ruling Fidesz and opposition Hungarian Socialist Party (MSZP), got entangled in a spiral of populist promises. After elections, the victorious MSZP began to act on its promises by proclaiming a so-called 100-day program of the Péter Medgyessy administration; however, one must add that the previous Viktor Orbán administration was the first to resort to populist measures and that Fidesz also supported the 100-day program in parliament. In fact, all parliamentary parties except one small conservative party (Hungarian Democratic Forum - MDF) embraced and endorsed openhanded populism that had nothing to do with accountability; in other words, sinking the public finance system was a consensual decision. In the period of 2002-2006, Hungary regularly posted the highest public finance deficits not only within the EU but out of all relevant economies in the world; the largest budgetary deficits were recorded in election years of 2002 and 2006, which documents that politicians tend to think and decide in political rather than economic cycles. In spite of vast fiscal incentives, the country failed to boost its economic growth and employment; in fact, Hungary’s growth was lower compared to any other V4 country and in the year that followed the four years of generous public spending (2007) it dropped to 1.2%, i.e. lower than the average of old member states (EU- 15), which meant that Hungarian economy had ceased to converge toward the EU average and had begun to lag behind again. One tangible result of the populist cycle was an increase in public debt from 52.1% of GDP in 2001 to 73% of GDP in 2008 (Eurostat 2009/b). When the global economic crisis arrived in Central Europe in fall of that year, Hungary found itself on the brink of insolvency; in October 2008, the IMF, the EU and the World Bank rescued it by extending a lifesaver loan worth 20 billion. 192
