Peter Magyar’s convincing victory in the elections in Hungary gave his center-right Tisza party a strong mandate that could allow it to carry out reforms more freely, strengthen the rule of law and potentially unfreeze billions of euros in funds from the European Union, writes Reuters.
Economists and political analysts believe that the expected two-thirds majority of the new government is the most favorable scenario for the European Union and the financial markets, and that it could stimulate strong growth in the Hungarian financial sector as early as next week.
However, a number of uncertainties remain. Cautious diplomats and analysts warn that the new government must fulfill its promises before the benefits are fully felt, although markets so far show confidence in the changes in Budapest, according to Reuters.
“This result is a milestone and will allow Magyar to rule with a freer hand,” said Mujtaba Rahman, director at Eurasia Group. “The most important thing is that they will be able to dismantle Orbán’s system and implement the reforms demanded by the European Union. This means that at least 6.4 billion euros from the Recovery and Resilience Mechanism could be quickly unblocked and channeled into the real economy.”
The election was seen as one of the most important events for European financial markets this year, given the long-standing conflicts between Viktor Orbán and Brussels over migration, the rule of law and relations with Russia.
During the campaign, Orban expressed confidence in victory despite lagging behind in the polls, emphasizing the protection of national identity and traditional values, while denying irregularities in the process. However, the markets have signaled for weeks the expectation of changes.
Magyar, addressing supporters who chanted “Europe, Europe” after Orban conceded defeat, promised to strengthen ties with the European Union and NATO and restore relations damaged by long-term political conflicts.
“The two-thirds majority that allows us to make constitutional changes will restore the system of checks and balances,” Magyar said.
“We will join the European Public Prosecutor’s Office and ensure the democratic functioning of the state. We will never again allow Hungary to be held hostage by any political structure.”
One of the key parts of Magyar’s plan is the unblocking of European Union funds that have been frozen due to rule of law concerns during Orbán’s rule.
“The two-thirds constitutional majority changes the situation completely,” said GZERO Media’s Ian Bremmer.
“This gives Magyar the power to change the constitution, remove the political cadres of the previous government from the institutions, fully access the funds of the European Union, and even consider the introduction of the euro.”
After the election, Magyar called on the chief state prosecutor, the president of the supreme court, the head of the media regulator and other high-ranking officials to resign, claiming that the institutions had been taken over by people close to Orban over the past 16 years.
He also announced the fight against corruption and meeting the requirements of the European Union, including strengthening the independence of the judiciary and the transparency of public procurement, in order to unblock funds.
Nevertheless, rating agencies such as S&P Global and Fitch Ratings, as well as some European diplomats, remain cautious in assessing whether all the funds will actually be paid out.
Diplomats warn that comparisons with Poland in 2023, when a pro-EU government quickly received funding after a change of government, may be too simplistic.
“There is no willingness to pay money only on the basis of promises,” said one diplomat of the European Union, emphasizing:
“Tisza will have to prove the results in practice.”
Capital Economics analysts believe that the eventual payment of funds could reduce Hungary’s budget deficit and stabilize the public debt in the coming years.
“Overall, the election result represents a major turning point for the Hungarian economy,” Liam Peach wrote, adding:
“The speed and sustainability of the positive market reaction will depend on how quickly the new government restores relations with the European Union and secures investor confidence.”
(Vijesti.ba)
