Since assuming power with an overwhelming parliamentary majority in May 2010, the Hungarian government of Prime Minister Viktor Orban has adopted a string of unpredictable economic policies. Ministers boasted about adopting an unorthodox strategy that would lead to at least 5% growth and trim the public debt ratio—in excess of 80% of GDP—inherited from the outgoing Socialist government.

Key elements of the strategy included so-called crisis taxes on selected activities, a hike in the standard VAT rate (to an international...