The governing Socialist party’s nominee to replace Ferenc Gyurcsany as prime minister, Gordon Bajnai, has told the party and the liberal Free Democrats — which has decided to support his candidacy — that he requires the explicit backing of both parties’ parliamentary deputies and their support for whatever measures he deems necessary to manage the economic crisis, unnamed sources MTI on Monday.
The board of the opposition Free Democrats voted 7-5 to support Bajnai, the current economy minister, but on condition that he appoint a number of party-neutral technocrats to top positions.
The last-ditch decision of the liberals could end the political logjam and defer an early election after Gyurcsany said was stepping down as head of government on March 21. At the weekend Gyurcsany also said he had decided to give up the party leadership post to which the Socialists had confirmed him on the same day.
Gabor Fodor, the Free Democrat leader, said Bajnai’s reform ideas were broadly similar to a package of proposals put forward by the Reform Alliance, a group of academics and business leaders, which outline structural reforms and big cuts to state spending.
The Socialist party is to convene for a party conference on April 5 and is expected to vote to officially nominate Bajnai for the post of prime minister. A parliamentary vote will follow later in the month.
Analysts expect the economy to contract by between 4 and 7.5 percent this year. Hungary’s forint has come under huge strain, recently dropping to an all-time low of around 317 to the euro. Foreign investors are worried that if there is a run on the forint, households with loans denominated in Swiss francs and euros will start defaulting.
Bajnai has warned however that tough measures will be needed — and fast — if the country is to avoid an economic collapse. He has told the two parties nominating him that he requires their full backing for painful fiscal adjustments.
Bajnai, a former businessman close to Gyurcsany, joined the government as an official overseeing economic development before becoming minister for local governments and regional development between 2007 and 2008. He took over as economy minister when the Socialist-Liberal coalition broke up last year.
Bajnai has said Hungary will witness a currency crisis this year unless the government implemented radical structural reforms.
“Already this year there could be a currency crisis which would cause a social and economic collapse. We must take determined steps to stop this from happening,” Bajnai told Nepszabadsag daily earlier.
He said successive governments had failed to wean Hungary off foreign credit because it had not addressed its most basic problems.
“Since 1998 there has been no major attempt at modernisation. Very few people are a part of the workforce and lots of people live on state handouts,” he said.
Bajnai said it was imperative to expand the tax base while at the same time cutting the burdens on businesses while reducing taxes and state spending.
Bajnai wants Hungary to adopt the euro as soon as possible in order to bolster the country’s stability.
The government has plans in place to cut the budget deficit to just below 3 percent of gross domestic product, but with slowing revenues on the back of a sharper contraction than expected, analysts say it will have to cut spending further.
“Bajnai said it was imperative to expand the tax base while at the same time cutting the burdens on businesses while reducing taxes and state spending.”
So they would essentially like to increase taxes at the same time as reducing them.
What a novel idea: replace one incompetent, corrupt sonofabitch with another one. Yabba-dabba-doo, we’re saved!
JD. I think you misunderstand.
The point is to widen the tax base by bringing more people into it. The working and tax paying poulation is too small. The tax burden falls on too small a proportion of the population. The problems of early retirement, ‘disability’ pensions and the large black economy need to be addressed.
It doesn’t matter who is in government if they continue to tax the working minority to have the money to bribe the non productive voting majority. This brings power and the ability for politicians, local and national, to get their hands on money! All parties!!
Hi Abácsi
Perhaps I do. Although I’d be interested in ways of expanding the tax base without increasing the overall tax burden on those already paying.
I just get the feeling its another concoction of statements that will ultimately mean more tax for everyone.
At some point they may realise they need to stimulate the economy not sit on its growth by just taxing people out of existance.