Viktor Orban returned to power as Hungary’s prime minister after eight years in opposition, pledging to accelerate economic growth in the first European Union member to obtain a bailout in the credit crisis.
Orban has yet to unveil details of his economic policy plans. He will have to balance pledges to cut taxes and boost growth after the worst recession in 18 years with investor concern that the new administration will loosen fiscal policy at a time when the euro area’s debt crisis prompts countries from Greece to England to cut spending to defend the euro.
“Fiscal risks in Hungary are particularly high and the government appears to be shifting its focus away from budget responsibility at a time when the euro zone is mired in a sovereign debt crisis,” Neil Shearing, a London-based emerging- market economist, said in a note to clients this week.
The Cabinet will place job creation and growth above budget discipline, Gyorgy Matolcsy, the new Economy and Finance Minister, said during a parliamentary committee hearing on May 25. Hungary can only “outgrow” its debt level, the highest among the EU’s eastern members at an estimated 79 percent of gross domestic product this year, he said, referring to lowering the ratio by accelerating growth.
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