One of the most dramatic events of modern Hungarian history took place 30 years ago this week, when the nominally centre-left coalition government led by PM Gyular Horn introduced its (in)famous economic stabilisation programme, commonly dubbed the 'Bokros Package' after its chief architect, then Finance Minister Lajos Bokros.
Lajos Bokros being interviewed today by political scientist László Kéri *. (Screen shot)
It seems a long time ago (well it is 30 years!) since the Hungarian government launched what is commonly referred to as the 'Bokros Package' - a set of economic reforms and budgetary cuts, including a pre-announced drip-drip devaluation of the forint, which bit into the living standards of any Hungarian earning a domestic wage.
The arguments for the cuts were powerful - key macro-economic indicators, including the balance of payments, current account deficit and inflation rate were well into dangerous territory in a country that was still transforming from a Socialist command economy, and living beyond its means.
But for many ordinary Hungarians, unaware of the grand economic picture, these austerity measures caused great pain and were seen as a betrayal of the promises touted by the Socialist-Free Democrat coalition in the election 11 months previously.
And despite the recovery in the wake of the package - Hungary's economy picked up to 4% plus by 1997-8 - some argue that it was very successfully used (or misused) by the Fidesz opposition to win the next election in 1998.
I've been too busy this past week with work to write more. Wikipedia English-language pages have a resume of the package for anyone interested here
and for those who speak Hungarian, the recent, in-depth László Kéri interview is on YouTube here (sorry, no subtitles):
Interestingly, the first thing Mr Bokros says is that for the rest of the interview he will refer to the measures as "the Stabilisation Programme" not because he does not want to be associated with the package, but because it was the work of numerous ministry experts who each deserve praise for their contributions (in a pleasant contrast to some of today's politicians).
He later wrote to me, saying:
"The stabilization program was announced on March 12, 1995. It was a Sunday as you may recall. Deliberately so, because of sensitive measures which could have caused adverse speculation if announced on days with open money and capital markets.
"It is interesting that international media outlets talk very little about the need for predictability in economic policy making, although that is one of the most, if not the most important requirement for generating trust and, hence, trigger adequate responses from the general public which is an indispensable ingredient for success. Trump does not know this word, neither his buddies. Everything remains unpredictable. See the stock indices. C`est la vie, as we say in English."
György Surányi, who was the central bank governor at the time, and an indispensable part of the team needed to make the reforms successful, clearly remembers the responsibility on his shoulders, writing to say it was "a really challenging moment of our careers. I’m happy and proud of being part of that process."
László Kéri was for a period a kind of house tutor in the 1980s to a young, thrusting law student named Viktor Orbán. Some of his memories and insights into the student and his contemporaries are in two earlier blog posts:
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