Hungary Returns Orban as Prime Minister After Power BoostZoltan Simon, Marton Eder and Edith Balazs
Hungarian Prime Minister Viktor Orban won another four-year term as his ruling party trounced rivals in an election the opposition said was a referendum on his unprecedented consolidation of power.
Orban’s Fidesz party was on the brink of retaining its two-thirds parliamentary majority with 99 percent of the ballots counted, the election regulator said on its website today. It gained 44.5 percent of party-list votes and led in 96 of the 106 single-member districts, the results showed.
“The outcome of the elections is an obvious, unambiguous mandate for us to continue what we have begun,” Orban told reporters in Budapest today. “Voters said yes to the new legal system put in place after 2010, including the new constitution, and they said yes to our new economic policies.”
The result boosts the Hungarian premier, who has amassed more power than any of his predecessors since the fall of communism. Orban has clashed with the European Union and international companies since winning a two-thirds majority in 2010, which enabled his party to change the constitution unilaterally.
Fidesz focused its campaign on utility price-cuts as opposition parties struggled to get their message out after Orban banned paid TV advertising for political parties and limited spots on public networks. The rules didn’t apply to the government, which flooded the airwaves with ads of “Hungary is doing better,” a slogan matching that of Fidesz.
Orban’s Fidesz party had an “undue advantage” in yesterday’s ballot as restrictive campaign rules and “biased media coverage” disadvantaged opposition parties, the Organization for Security and Cooperation in Europe, an international election monitoring agency, said in a preliminary report today.
The forint weakened 0.5 percent to 307.24 per euro by 4:30 p.m. in Budapest, the biggest drop since March 21. The currency has weakened 14 percent in the past four years, more than the currencies of other eastern EU members that haven’t adopted the euro such as Poland, the Czech Republic, Romania and Bulgaria. The benchmark BUX stock index rose 0.7 percent today. It has dropped 29 percent in the past four years, compared with a 3.8 percent decline in the MSCI Emerging Markets Index.
Gains on forint debt at 39 percent in the past four years were better than those for Poland and the Czech Republic, yet they were the worst among the three nations, at 6.5 percent, when adjusted for price fluctuations, Bloomberg Riskless Return Ranking showed.
Orban, who bolstered his popularity with a 20 percent cut in household energy prices over the past year, rejected concern over the erosion of democracy as lobbying for foreign interests such as banks and energy companies and convinced Hungarians that he was fighting to preserve the country’s sovereignty.
“This will reinforce Orban’s conviction that he has pursued the right policies,” Attila Juhasz, an analyst at Political Capital in Budapest, said by phone. He won’t have “any serious internal political counterweight.”
The opposition alliance headed by the Socialist Party had 26 percent of the party-list votes and led in 10 individual districts. The Jobbik party, which describes itself as “national radical” and wants a referendum on EU membership, was third with 20.5 percent, compared with 17 percent four years ago. The green-liberal party LMP had 5.3 percent, clearing the threshold for parliamentary representation. Turnout was 61 percent.
Orban, who is set to become the country’s only three-term premier since the end of communism, asked voters for another supermajority that would allow his government to change the constitution. His party may have won 133 of the 199 parliamentary seats, just enough to do that, partial results showed. Seat allocation may change when official results are published later this week.
“Even if Fidesz does not secure a two-thirds majority, it is unlikely to make a big difference, as Orban will be able to make one-by-one deals with elements of the opposition, if needed,” Mujtaba Rahman, an analyst at Eurasia Group in London, said in an e-mail today.
Since 2010, Orban’s cabinet rewrote the constitution over opposition protests, curbed the top court’s power, staffed agencies, such as the central bank and public media, with allies and passed new election rules.
Orban faced down criticism from international partners and foreign investors as he weaned the country off International Monetary Fund aid, seized private pension-fund assets and levied industry taxes to narrow the budget deficit to less than 3 percent of gross domestic product, averting cuts in EU funds.
Economic policy “still won’t be transparent or predictable and the chances of potential unorthodox steps grow with a two-thirds majority,” Zoltan Szucs, a money manager at Aegon NV’s unit in Budapest, who helps oversee 2 billion euros ($2.7 billion) of assets, said by e-mail.
Fidesz seeks to eliminate by 2015 exchange-rate risk for borrowers holding $11 billion in foreign-currency mortgages after repeated attempts since 2010, Antal Rogan, the ruling party’s parliamentary leader, told news website HVG.hu April 2.
Orban, who has unveiled little of his agenda for the next four years besides pledging a “continuation” of policies, has also said that the government wants to shift control of utilities to non-profit operators and extend energy price-cuts to companies after lowering them by 20 percent for households over the past year.
Hungary’s economic policy under Orban was focused on keeping the budget deficit under control, an EU-mandated requirement, while trying to stick to a pre-election pledge to end austerity. Instead of direct taxes to raise revenue, the government introduced Europe’s highest bank levy and a transaction tax on commercial lenders as well as special taxes on telecommunications and energy companies.
Investment fell 5.2 percent in 2012, the fourth consecutive year of contraction, according to the Budapest-based statistics office. It has trailed its eastern EU peers every quarter for the past four years, according to Eurostat data. Investment climbed in 2013, helped by a 34 percent increase in government spending. That contributed to the economy growing 2.7 percent in the fourth quarter from a year earlier, the biggest increase in seven years.
The budget deficit was 2.2 percent of GDP last year, which means the country is poised to avoid returning to EU monitoring for fiscal offenders, Economy Minister Mihaly Varga said March 31. Hungary exited the excessive-deficit procedure last year for the first time since it joined the bloc in 2004.
“The key challenge of the coming years will be boosting economic growth,” Daniel Bebesy, a money manager at Budapest Fund Management, said by phone before the election. “The low level of investments is bound to avenge itself at some point and the next government will have to tackle this problem.”