Green party LMP ('Politics Can Be Different’) added 11 more mandates to the five it secured in the first round no 11 April. The Hungarian Democratic Forum (MDF) and the liberal Free Democrats (SZDSZ), two parties that had assumed a major role in the change of regime, have dropped out as none of them garnered 5% of the votes.

Turnout was 41.89%, which is the lowest figure for the second round since the change of regime. It was 64.39% four years ago, 73.51% eight years ago and 57.01% 12 years ago.

No single party has won such a majority since the change of regime in Hungary, but the two-thirds Fidesz has represents a power that is unique even in Europe.

The majority Fidesz-KDNP has means there is no legal obstacle for the party (or alliance if you will) to pass any legislation, except for creating a new constitution.

Two-thirds majority is required in 49 issues, according to the constitution, 17 of which require voting by two-thirds of the MPs, while any modification to the rest needs no more than a concurring vote by two-thirds of those present at the vote.

The 'supermajority’ will allow Fidesz to adopt sweeping structural reform, for example suppress part of the 3,200 local governments to save money, amend the media law, grant citizenships to Hungarians living abroad (this may raise tensions with neighbouring countries).

Morgan Stanley’s analysts said after a recent visit to Budapest that the issue it found by far the most controversy around was the fiscal deficit picture after Fidesz gets into office (June-July) and implements a fiscal audit.

Morgan Stanley’s analysts found "broad-based confirmation" of their view that Fidesz "understands the importance of the IMF framework."

"For that reason, any upside revision to this year’s deficit target (3.8% of GDP) will be the outcome of a negotiation with the Fund. Essentially, Fidesz will deliver reform plans in return for a deficit target which is less detrimental to the growth outlook. This is very different from outright fiscal easing," the analysts added.

As a result of the aforementioned, Morgan Stanley sees a "high probability" that later this year Fidesz will choose to revise the deficit target up to around 5% of GDP .

MSZP President Ildikó Lendvai has announced that she and the Presidency have tendered their resignation to the party congress."

Source: Portfolio Online Financial Journal