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New Smaller Government to Tackle Hungary's Economic Crisis

  • Stefan Bos

The incoming prime minister of Hungary, Viktor Orban, has introduced ministers of what observers say will be the smallest Cabinet since the country's communist regime collapsed in 1989. The incoming center right government will have to lift the European Union member from a deep recession.

Hungary's energetic Prime Minister-Elect Viktor Orban, 46, has made clear there is no time for his center right Fidesz Party to celebrate its victory over the ruling Socialists in last month's parliamentary elections.

His administration inherits a country that narrowly escaped financial collapse in 2008 with a multi-billion-dollar rescue package from the International Monetary Fund and the European Union.

Mr. Orban wants a new deal with international lenders after the current agreement expires by October, but not at any price. He says Hungary should have more of a say in its financial affairs. He added his government will seek support for its tax cuts and other plans to reduce debt.

And, he plans to reform the central bank saying it is no place for "offshore knights," referring to Bank Governor Andras Simor's former investments in Cyprus. Simor says however he wants to fill his mandate until 2013.

Fidesz also warns that Hungary's deficit will be above the outgoing government's target of 3.8 percent of the gross domestic product for this year. The party blames the shortfall on a lag in tax revenues and the consolidation of debts of state-owned firms.

Mr. Orban has defended his decision to tackle these economic, and social, difficulties with a more efficient government that includes just eight ministers.

He says, "It is the task of the government to represent the national interests and be effective in its work."

Not everyone agrees. The outgoing government and the opposition fear the creation of ''super ministries" with several tasks.

Take the environment. It will be part of a busy ministry that also deals with agriculture, rural development and water management.

The far-right Jobbik Party says the move threatens independent environmental policies that were introduced after the fall of communism.

Speaking to reporters near the ministry building, Jobbik's deputy parliamentary leader, Tamas Hegedus, admits that governments have "made many mistakes in their environment policies in the past 20 years". But he adds the independent portfolio had become "a symbol of the importance of environment and nature protection."

But with an unprecedented two-thirds majority in Hungary's democratic parliament, analysts say the soon ruling Fidesz party can pass laws and constitutional changes to reduce the seize of national and local governments, and to reform the expensive state-run health care, education, and other sectors.

The international community is also watching the new government's foreign policies, especially towards its neighbors, including Slovakia.

Bratislava has condemned plans to grant ethnic Hungarians living in neighboring countries Hungarian citizenship. Hungary lost two-third of its territory following world War I and many ethnic Hungarians still live in these areas.

But incoming Foreign Minister Janos Martonyi says citizenship will be given on a case-by-case basis, and that he plans to reach out to the European Union.

Analysts say the new government will soon has to prove its credentials amid fears that far right legislators will use public anger over the country's economic crisis and resentment towards minority gypsies, or Roma, to pressure Fidesz. The inaugural session of Hungary's new parliament is scheduled for May 14.

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