Budapest - A majority of fund managers and analysts see early elections in Hungary as the best solution to the crisis provoked this week when the ruling coalition split, a poll by financial website portfolio.hu published Thursday found. Junior coalition party the Alliance of Free Democrats quit the government after a disagreement with its senior partner, the Hungarian Socialist Party, on the speed of economic reforms aimed at cutting the budget deficit and adopting the euro.
The Hungarian Socialist Party has said it plans to continue as a minority government, but according to portfolio.hu's poll, most believe this would mean the end of further reforms necessary to stick the deficit reduction process.
Some 13 out of 22 respondents said that calling early elections, while negative in the short term, would increase the chances of reforms.
The government is currently desperately unpopular - the Socialists are polling at around 15 per cent - as a consequence of the economic reforms, which hiked tax and energy prices, pushed up inflation and almost stalled the economy.
The final straw for the government came at the start of March, when it suffered a sweeping defeat in a referendum on fees for medical treatment and tuition fees. The defeat was seen as a wider rejection of the government's economic reforms.
Main opposition party Fidesz would score a massive victory if elections were held now, and while there were some concerns over its willingness to continue with belt-tightening, this was viewed as being better than a hamstrung minority government.
"If Fidesz showed willingness to carry out a similar fiscal adjustment, the best possible option would be snap elections as soon as possible and a two-thirds victory by Fidesz," one of the analysts said.
"Under that scenario ... basic laws could be easily amended and they wouldn't have to care about popularity figures any more," the analyst added.
Analysts expect the government to suspend or drastically slow the reform process and also begin spending as it attempts to win back voters before the 2010 general elections.
This would endanger the deficit reduction efforts, which have so far cut the gap from 9.2 per cent of gross domestic product in 2006 to 5.5 per cent in 2007.
The plan is to get the deficit down to 3.2 per cent by 2009 and then work toward adopting the euro by around 2014.
