Prime Minister Viktor Orban evaluated the first 100 days of his cabinet on Tuesday, saying Hungarian voters had chosen to break with the “hopelessness of the past eight years”.
Reprising a formulation of the past few days, Orban said voters had rejected the politics of utopia – a style of governance he insisted and been favoured by his Socialist predecessors – and decided to face reality instead.
Orban said he was laying the foundations for the centre-right government’s “system of national cooperation”.
“Hungarians have passed important decisions amid unity not experienced for a long time, after breaking with the hopelessness of the past eight years. A critical mass of people decided to face reality and banish delirious notions of utopia,” he told a meeting of centre-right academics.
Orban’s government entered office in May after his centre-right Fidesz party and allied Christian Democrats gained a sweeping victory in the general election the previous month and secured a two-thirds majority in parliament.
The Fidesz government has said it will stick to this year’s budget deficit target of 3.8 percent of gross domestic product as part of an agreement with the EU, and it is under pressure to keep a lid on spending in the face of uncertain revenues and current data indicating that fulfilling that target could be difficult.
After the election Orban told voters that the government would not introduce any austerity measures and promised big tax cuts. He is now adding the message that voters had chosen to “face reality” after the profligacy of the previous government.
Orsolya Szomszed, a politicial analyst at the Nezopont Institute, said that Orban was fusing together an earlier rhetorical device which emphasises the idea of “national cooperation” with a new one which contrasts the idea of a false promise of utopia under the former government and the delivery of real achievements based on soberly confronting reality. In this sense, Orban seems to be managing expectations, she said.
Szomszed said that Orban was careful not to upset any one particular group of voters ahead of the October local elections. Orban instead dwelt on the contrast between the period before he got elected and a new period he characterises as one based on trust and credibility.
The prime minister accused his Socialist-liberal governing predecessors of having committed a “political crime” by taking out huge foreign loans to finance welfare services. As a consequence, Hungary will have to spend an annual 3,000 billion forints on servicing its debt, well over the total of the country’s annual personal income tax, he said.
He insisted that Hungary’s post-communist political parties had agreed “never again” adopt the policies of the 70s and 80s, which had seriously indebted the country. And he said that his government would put the country on an independent financial footing.
Orban said that holding former governing officials to account for any wrongdoing was a “must” for his government.
“Everyone implicated should be called to account so that no one ever again dares to use different tricks to use public funds for private purposes,” he said.
Orban noted the new leaner government structure, comprising the fewest ministers and ministries since the systems change in 1990.
He also pointed to the fast pace of legislation. Parliament, Orban said, had enacted 55 laws over the past 100 days, as against 19 by the previous Parliament four years ago.
For the first time, he said, the government is implementing a programme which is consistent with its election manifesto.
“Once this programme has been adopted, no politician can say that election and governance are two different things,” he said.
Orban said a law granting easier access to citizenship for ethnic Hungarians was among the main achievements of his centre-right government during his first 100 days in office.
He said he wanted to “abandon the practice” of meeting voters “once in a four-year cycle”. Orban noted that he had held broad consultations on public security and the economy and further endeavours would cover health care, social services, the new constitution and Hungarian democracy.
The leader of the opposition Socialist party said that Orban had skirted round several important issues and failed to mention the problems faced by a large number of loan-holders under pressure by the record low level of the forint against the Swiss franc, which is making monthly repayments of franc-denominated loans exceptionally dear.
Attila Mesterhazy said Orban had left out any mention of whether there would in fact be any changes to the tax system or how his policy of job creation was proceeding. He also said Orban had failed to mention the deterioration in the country’s standing abroad.
The leader of the radical nationalist Jobbik party called the speech “a collection of commonplaces”, saying that Orban spoke about the past 100 days but remained silent about the forthcoming 100 days.
The parliamentary leader of the green party Politics Can Be Different said he mainly agreed with Orban’s assessment of Hungary’s current situation but said the road chosen by the government was squarely opposed to its endeavour to renew democracy and pursue a policy that creates opportunities.
“Orban said that holding former governing officials to account for any wrongdoing was a “must” for his government. “Everyone implicated should be called to account so that no one ever again dares to use different tricks to use public funds for private purposes,” he said”
This is wonderful to say, giving the Hungarian people the impression that Fidesz is here for the average Hungarian. But…does anybody know for sure if this is really happening? Are they paying lip service? Are they going after insignificant individuals in hopes that the ‘real’ culprits/ ‘main players’ get forgotten about? Equivalent of throw people a bone? Something/someone is better than nothing?
“He also pointed to the fast pace of legislation. Parliament, Orban said, had enacted 55 laws over the past 100 days, as against 19 by the previous Parliament four years ago”
Isn’t it usually easier when you have a majority Government? Hardly anything to brag about.
“failed to mention the problems faced by a large number of loan-holders under pressure by the record low level of the forint against the Swiss franc, which is making monthly repayments of franc-denominated loans exceptionally dear”
And who took out these loans? I would think that it would be the individuals responsibility for choosing to take out a foreign currency loan. Not the Governments.
And who took out these loans? I would think that it would be the individuals responsibility for choosing to take out a foreign currency loan. Not the Governments
justasking at September 8, 2010 4:52 PM
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Totally agree, but the incoming Government has done some pretty stupid comments that affected the HUF rather badly. If this is because they want to create a problem (80-90% of loans last 5 years has been in Swiss Franc, then that interest rate was 30-50% of the same loan in HUF), or are just so totally stupid that they do not understand people (= foreign investors) actually listen to what they say and do, is a good question
Time will tell
What is obvious is that if the situation do not change to the better for these mortgage payers, it will create a back-lash for Fidesz. It is safe to assume that most of these mortgage payers voted for Fidesz, so some patience and ‘in Orban We Trust’ exist, but when/if that change, the disappointment will be big and hard
Every month those Swiss Franc loan just pile up
@Viking,
” then that interest rate was 30-50% of the same loan in HUF”
That’s loansharking…pure and simple.
I do believe that the Government should introduce legislation that prevents this kind of obvious abuse from the lenders part. Similar to what we have in Canada.
That being said, people also have to take responsibility by not overextending themselves.
Greed from all sides.
I’ve written about this “Hitel” business before:
You see in the ads of the supermarkets and electronics retailers the offers of new TVs, computers whatever and it says quite clearly (not in fine print, but really large) THM (Effective interest rate) 35 %.
Many people must have bought their appliances this way …
I also know several people who bought their apartments on credit (Swiss Francs) – who with the weak forint now pay almost 50% more each month.
Of course you can say they were stupid – earning maybe 100.000 a month and etting a loan where they initially paid 50.000 back and now maybe 70.000 each month …
Can you imagine what happens, when they lose their job?
There ar tzhousands of repossessed cars on the market too – sometimes people financed a car with a loan running for 10 years …
So who is to blame ?
@Wolfi,
Are you serious when you say “So who is to blame ? ”
Since when are TVs and computers something a person needs to survive? Okay, TVs are great. But do you really need a 42″ flat screen?
Whats wrong with saving a little more before you but that apartment? What’s wrong with driving an older car?
People refuse to wait for anything…NOW, NOW, NOW! There is no such thing as ‘delayed gratification’ anymore. (Okay Bystander, I know you will be able to run with that last sentence…just try and refuse the urge to do so
Regarding the 35% interest…I’ve never heard of such a thing. This is allowed?
That’s where the Government needs to step in with regulations to save some people from themselves. And the people who are ready to exploit them as well.
@justasking:
That’s Hungarian everyday reality …
I think in Germany the law says something about loans of this type – any way banks “only give money to those who don’t need it” …
The high interest rate in Hungary is probably calculated in such a way that even with a certain percentage of people who default the bank still wins.
Regarding “who needs these things ?” – it’s often peer pressure, especially with younger people and children “Our neighbour has this new shiny tv” – and what have we got ?
Wasn’t there something similar after WW2 in the US ? “Keeping up with the Joneses” and putting new exterior features on cars each year (like square lights one year, triangles the next, nothing important really), so your neighbours could tell the age of your car immediately …
I remember a pop song about this:
A dollar down and a dollar a week …
PS: We don’t have a flatscreen TV either – often we just watch the news and switch off again.
@Wolfi,
)
“That’s Hungarian everyday reality …”
The loans percentages? Maybe. But the ‘keeping up with the Joneses” is a World wide phenomena.
I’m hard present to think of a single thing in this World, that I would want so desperately, that I would take out a loan at 35% interest?
Hey, I like new stuff just like the next person. As I said before, I want something…I save for it and pay cash. Sure bigger ticket items I have taken out loans, but they were usually small and paid off right away.
PS: We do have a couple of flat-screen TVs and the one in the family-room is usually on most of the day. Okay, on the music channel, but on none the less
Loan sharking, and government and national bank stupidity, are two separate things.
Andras Simor (MNB governor) was busy buying the forint with borrowed euros to make it appear stronger than it actually was.
Cosmetic manipulation which has now resulted in the problems for those that inadvisedly took out Swiss franc denominated loans.
Hungary is in a mess. Soaring prices and incredibly low wages. Check out the price of gas, electric, and petrol, and the ever-spiraling cost of food in the supermarkets against what the average take home pay. And you have a recipe for disaster.
Orban can bleat all he wants. He has identified all the problems, has have we, over the past two years or so, on this site.
The thing is though, we are not paid to put things right.
Orbi and his playmates are charged with just such a task.
Regarding the 35% interest…I’ve never heard of such a thing. This is allowed?
justasking at September 8, 2010 9:28 PM
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This is the normal interest charged on Credit Cards in many European countries. Normally between 28-36% *effectively* per year
In most Eu-countries, probably all, what Hungarians call THM (the *effective* rate calculated according to some national applicable rule) *must* be displayed
But if you do not care…?
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To have interests in HUF that are much higher than in EUR/CHF is not ‘loan sharking’
That is how it is in Sweden and other small non-Euro countries. It has always been cheaper to loan in Euro and before that, the D-mark was the cheapest
The back-side is that you as the borrower always carry the exchange rate risk
.
But do not despair, Viktor has a solution for that!
He is going to forbid non-HUF loans from the Autumn (that was the promise at least)
At the same time we, the borrowers, will have the chance to convert our foreign-denominated loans into HUF
Does anyone think the interest rate will be the same?
Forget it, the only thing is that competition between banks in Hungary will be less and loans more expensive, then only HUF-based loans will be available and the HUF on free-fall
Thanks, Viktor!
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It is the task of the National Bank to buy its own currency and prop it up ‘artificially’ when it is down
But you need money for that…
The US Federal Reserve do that, the UK CB do that, the Swedish CB do that and even the European Central Bank do
http://www.bloomberg.com/news/2010-09-08/hungary-s-surrender-to-eu-on-budget-deficit-likely-to-boost-forint-bonds.html
From the link above:
“The cost of insuring Hungary’s debt against default has risen the most in the world since Prime Minister Viktor Orban took office in May amid pledges to boost growth and end five years of austerity”
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I suppose there are better World Records to break…