© Fazekas István

"Please, help us," Ferenc Gyurcsany asked Vladimir Putin, the Russian prime minister, in a phone conversation a good two weeks ago, HVG has learned from sources close to the prime minister. It is believed that the matter at hand was the financing of Malev, the Hungarian flag carrier, which is owned by Boris Abramovitch, a Russian businessman, though it is not known if he asked for more than this from the Russian government. But that Washington Post claims that Hungary's E20bn package from the IMF, the EU and the World Bank was chosen in preference to a Russian offer. The IMF-led package, which is oversized in comparison to the E4bn in Hungarian sovereign debt that falls due next year, is intended to restore the confidence of investors who are shying away from Hungarian debt despite the 14 per cent yields available.

Janos Veres, the finance minister, said the lenders made no demands beyond the commitments already made in the 2006 convergence programme. This claim is supported by the fact that the IMF appears to be loosening the strings it attaches to its loans in view of the unpredictable nature of the gloabl economic crisis. "This isn't the moment to be casting stones," a Brussels insider told HVG on the evening before the Brussels summit where the EU's contribution was decided on. There are limits to this generosity: the EU finally decided that its loan would only be open for two years and could not be extended for a further year. The IMF loan falls due in 17 months.

In any case, it is clear from the European Commission's justification of the loan, that the loan had a symbolic purpose - the loan was designed to show that support would be available for all member states that got in trouble.

This tough international response to the threats the financial markets were issuing to Hungary is being used by the government to push through draconian cuts designed to take the country towards the eurozone. The latest of three revisions to the budget will remove the risk of Hungary being subject to sanctions over its budget deficit by the middle of next year and even make entering ERM II a possibility.

The latest budget plan should bring the budget deficit under 3 per cent this year and to 2.6 per cent next year while inflation would be at 4.5 per cent. Government debt is the toughest area: this has to be brought down from 67 per cent of GDP to 60 per cent, but two successive years of falling endebtedness is enough to meet the Maastricht criteria.