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Explanatory synthesis

Hill Gergely 10.05.2017

Explanatory synthesis Why Hungary still has a huge debt The question frequently comes up to surface in discussions between the residents of Hungary. “Debt is rising, money is disappearing! The government only steals money for their own good!” But how exactly did Hungary get in such debt? After the collapse of the Soviet Union, smaller countries like Hungary, Poland (where communism was present, basically). By 1989, the Communist systems were going through a process of collapse. With the economic and political crises at hand, Hungary went through an oddly calm process of democratization. This led to a regime change, Hungary became a republic. Before all that, the communist leader János Kádár, the country became the "the happiest barracks in the socialist camp.”[1] With elements of free market economics, as well as an improved human rights record, it represented a quiet reform and deviation from the Soviet principles applied to Hungary in the previous decade. However, this all came with a cost: money. Since Hungarian economy was not great to finance everything, Kádár had to take huge loans. After the collapse of communism regime, the new government took responsibility for these loans (however it had the chance have the loans exempted). Since 1989, the Hungarian public debt rose to almost 75% of the country’s GDP. This is the main reason of Hungary’s public debt.

1 Richard C. Frucht: Eastern Europe: An Introduction to the People, Lands, and Culture, 1st book. pp. 369...