Hungary's prime minister told supporters on Friday the country can take a "giant step forward" if his ruling Fidesz party wins municipal elections next month, enabling it to revive the weak economy. Viktor Orban, whose centre-right Fidesz has retained a three-to-one lead in opinion polls since ousting the Socialists from power in April, said putting Hungary back onto its feet would require an unprecedented effort.
"Again, all of us will have to join hands just as we did in April...wherever we live," Orban said in a sports hall in Budapest. "Hungary can be brought back onto its feet only if we lift it everywhere."
Orban, who warned against complacency over Fidesz's massive lead in the polls, kept quiet about his plans for the economy. Hungary holds municipal elections on October 3, where Fidesz is expected to extend its grip on power. Seeking to maximise its victory, the party is unlikely to present details of its 2011 fiscal plans before the vote, analysts said.
The top prize will be Budapest, ruled by liberal mayor Gabor Demszky for the past two decades, and Fidesz has a stronger chance than ever to oust the left from its main stronghold as a string of corruption scandals have undermined their support. The new government has flabbergasted markets several times since taking office in May, most recently by suspending a review of Hungary's 20 billion euro IMF/EU funding deal due to expire next month and by ruling out a new loan agreement.
Orban's harsh rhetoric against the IMF pleased voters - scarred by a steep recession in 2009 and years of austerity under the previous Socialist government - but he failed to convince the European Union to allow more tax cuts. Markets took some reprieve this week when Hungary bowed to pressure from the EU to cut its budget deficit below 3 percent of GDP in 2011, but Hungarian assets are still weaker than in April, when Fidesz came to power.
"In the end, the government is likely to do enough to avoid disaster on the fiscal policy front, and also come to some kind of agreement with the IMF," said Preston Keat at Eurasia Group. "The ongoing concern is that the main drivers of this policy compliance will be the EU and market pressures, and not any real commitment to comprehensive reform by the government."