UPDATE 4-Hungary’s Fidesz wins historic two-thirds mandate

* Fidesz wins 263 of 386 seats, 98 pct of votes counted

* PM elect Orban declares historic election win

* Strong mandate will allow deep reforms-analysts

* Fidesz’ big election win seen positive for markets

(Recasts with Orban, Jobbik, more detail)

By Marton Dunai and Krisztina Than

BUDAPEST, April 25 (BestGrowthStock) – Hungary’s next prime minister
Viktor Orban said on Sunday voters had carried out a
“revolution” by giving his party two thirds of the seats in
parliament to rebuild Hungary after a near financial collapse.

With nearly all second round votes counted, centre-right
Fidesz had won 263 seats, above the 258 needed for the
two-thirds majority, ousting the Socialists after eight years
and securing a mandate to enact reforms and revive the economy.

“Revolution happened today in the polling booths,” Orban told
some 4,000 cheering supporters in downtown Budapest.

“Hungarian people today have ousted the regime of oligarchs
who misused their power, and the people have established a new
regime, the regime of national unity.”

Fidesz was last in power between 1998 and 2002 and Orban can
now form the first non-coalition government with a two-thirds
mandate in Hungary’s 20-year post-communist history.


For more on Hungary’s election, see [ID:nLDE63L1O6]


The prospect of a strong government is seen by analysts as
positive for the forint currency and financial markets in the
short term, but Fidesz will not enjoy a long honeymoon period.

Investors will want to see clear plans on how it wants to
lower taxes and also keep the budget deficit in check.

Hungary, which has a track record of deficit overshoots,
stabilised its finances with painful spending cuts last year.
With its public debt still at around 80 percent of GDP, the new
government will not have much fiscal room of manoeuvre and will
have to set the debt on a declining path. [ID:nLDE63O0E]

“If implemented, changes like the reform of the municipal
system or a profound tax and labour market reform would shift
the nature of the fiscal adjustment from expenditure freezes …
towards structural changes that would support long-term fiscal
sustainability,” analysts at Goldman Sachs said.

“A failure to implement the promised reforms would quickly
erode the confidence in the new government and the course of the
economic policy.”


Government bonds and the forint have rallied in the two
weeks since Fidesz secured a majority in the first round.

The central bank is seen cutting interest rates further by
25 basis points to a new all-time low of 5.25 percent on Monday.

The Socialists will have 59 seats in the next parliament
while far-right Jobbik will have 47 seats. Green liberal LMP has
won 16 seats based on preliminary results.

Its mandate would enable Fidesz to enact reforms such as
streamlining local government and changing electoral law or even
the constitution.

It can also make dual citizenship easier to get for millions
of ethnic Hungarians in neighbouring states which may lead to
tension with Slovakia and also some other neighbours.

Fidesz has pledged to create jobs, lower taxes, and cut
bureaucracy to revive the economy.

It has also said it wanted a new deal with international
lenders — the IMF and the EU — which saved Hungary from
financial collapse in October 2008.

The deal will expire by October and Fidesz will likely want
to negotiate a higher budget deficit for this year, which
analysts said the IMF would probably accept only if it saw a
clear plan for structural reform.

Hungarians, weary of a deep recession and unemployment
running at a 16-year high, will want to see an improvement in
their lives quickly, and with municipal elections due in
October, Fidesz will need to make some symbolic changes.

It has promised to halve the size of parliament and the
number of representatives in councils and curb corruption.

“Public safety, holding corrupt leaders accountable, and
most of all, jobs. That’s what most Hungarians want,” said Janos
Fristaczki, 60, a bus driver.

Fidesz will face pressure from Jobbik to keep its promises.

“A million people expect the tax cut, a million expect that
the threat of being evicted from the homes will be averted, that
crime will be liquidated …” Jobbik chairman Gabor Vona told
supporters on Sunday.

“If the new government, breaching its election pledges,
wants to water down these urgent issues, Jobbik will be ready to
force its will — which in our view is the will of the whole
society — on the cabinet to be formed, using all tools in
parliament and all democratic tools outside parliament.”
(Additional reporting by Gergely Szakacs and Sandor Peto;
Editing by Alison Williams)

UPDATE 4-Hungary’s Fidesz wins historic two-thirds mandate