Europe

Home page

Europe

Orban vows growth, tax cuts to boost Hungary

13 April 2010 04:59 (UTC +04:00)

Baku â€“ APA. Hungary’s next premier set economic growth and tax cuts as priorities for the center-right Fidesz party Monday after voters punished the ruling Socialists for steep spending cuts to curb the budget deficit, APA reports quoting â€œThe Washington Postâ€.
Viktor Orban told a news conference that his government would also aim to cut the deficit but could only set a credible plan when true budget data for 2010 became known.
"The focus of our economic policy is not austerity measures, but how to generate economic growth -- this is the question," he said.
"I cannot carry out any kind of budget rationalization if at the same time we cannot put the Hungarian economy on a growth track."
Fidesz faces great expectations from investors and the public to put Hungary on the path to sustainable growth after near financial collapse. Another major challenge looms in containing the popularity of the far-right Jobbik party, which came third and won its first seats in parliament.
Fidesz won 206 of the 386 parliamentary seats in Sunday’s election and stands a good chance of reaching the two-thirds threshold in the second round on April 25.
That would enable it to pass reforms and even modify a constitution written 20 years ago after communism collapsed.
"The most important step will be tax cuts, I have been for this for years and I will do my utmost to make it happen," Orban said.
Orban added that Fidesz would also boost competitiveness, eradicate corruption and clamp down on bureaucracy.
Moody’s rating agency said earlier that Fidesz must continue fiscal consolidation after Socialist budget cuts and that it was reasonable to maintain its negative outlook on Hungary.
The Socialists reined in the deficit under a rescue deal led by the International Monetary Fund. Hungary’s economy contracted by 6.3 percent last year, while unemployment is running at 11.4 percent -- the highest since 1994.
"It will be key to see how the Fidesz government addresses fiscal issues and there remain some things to be detailed from Fidesz," Moody’s Senior Analyst Dietmar Hornung told Reuters in an interview.
The forint strengthened by 0.6 percent versus the euro to 264.99 by 1338 GMT, outperforming regional currencies. Government bond yields dropped by over 20 basis points as the impact of good news about the Greek debt crisis was amplified by the prospect of a strong Hungarian government, traders said.
Hungary’s main share index firmed to a 27-month high before retreating to trade firmer by 0.86 percent from Friday.
Leveraging discontent over the economic crisis and Hungary’s large Roma minority, Jobbik obtained 26 seats in parliament on the first round, against the 28 won by the Socialists, while the green liberal LMP wound up with five seats.
Under the complex electoral system, 121 seats will be decided in the second round. Of these, 58 will be distributed based on a national compensation list, while the others are run-offs in individual constituencies.