UPDATE 1-Fidesz seen cementing power in Hungary local vote

* Centre-right Fidesz seen solidifying positions

* IMF/EU talks, 2011 budget in focus of markets now

(Adds detail, analysts)

BUDAPEST, July 15 (BestGrowthStock) – Hungary will hold municipal
elections on Oct. 3 in which the ruling centre-right Fidesz
party is expected to solidify its powers at local government
level after a big victory in parliamentary elections in April.

Fidesz, which won a two-thirds majority in parliament and
ousted the Socialists after eight years in power, has kept its
huge lead in opinion polls since the vote.

“The main stake in the municipal elections is whether
Budapest and the big cities would come under Fidesz rule,”
political analyst Zoltan Kiszelly said. “Fidesz starts off from
a good footing.”

Budapest is currently run by liberal mayor Gabor Demszky,
who will leave office after 20 years.

Fidesz, which promised tax cuts and jobs before the April
vote, faces the tough task of reviving an economy as it emerges
from a deep recession in 2009, while keeping the budget on track
to meet conditions of international lenders.

The new government is currently in talks with the
International Monetary Fund (IMF) and the European Union about a
review of Hungary’s existing financing deal which will expire in
October, and it has said it would seek a new precautionary deal
with lenders for 2011 and 2012. [ID:nLDE6610H3]

Markets are following the talks very closely and are also
eyeing a second economic action plan promised by Prime Minister
Viktor Orban in June, when he launched a series of measures to
meet this year’s budget deficit target of 3.8 percent of GDP.

“The local elections are usually not really interesting for
markets, but this year they are, in the sense that the prime
minister has promised a second action plan which, I think will
come after the vote,” said Zoltan Torok, analyst at Raiffeisen
in Budapest.

Torok said this plan would likely include tough spending
cuts aimed at cutting the deficit further in 2011.

“Local government elections could only matter to the market
in the sense that the cabinet may want to delay some of its
tougher fiscal decisions until after the elections are over,”
said Gyorgy Barta, an analyst at CIB Bank.

The 2011 budget plans are expected to be the focus of
negotiations with the IMF and EU as Hungary must bring its
deficit below 3 percent next year under the EU’s Excessive
Deficit Procedure (EDP).[ID:nLDE66D1QL]

In a poll on Thursday, pollster Median said that 53 percent
of Hungarians believed the new government led by Orban was
performing well, which is higher than the score Orban’s last
cabinet recorded in 1998 after winning elections then.

Fidesz had 66 percent support among decided voters in early
July, compared with 15 percent for the Socialists and 12 for
far-right Jobbik which got into parliament for the first time.

Kiszelly said Jobbik might end up as the biggest loser in
the autumn municipal elections as the protest vote which lifted
it into parliament in April might not be so strong any more.

(Reporting by Krisztina Than; Editing by Angus MacSwan)

UPDATE 1-Fidesz seen cementing power in Hungary local vote