"Political tension between Hungary's two governing parties is growing by the minute, as Socialist Prime Minister Ferenc Gyurcsány - ignoring a sharp rebuttal by the junior coalition party, the liberal Free Democrats (SZDSZ) - fired Health Minister Ágnes Horváth, a member of SZDSZ.Following a one-on-one talk, the PM has told Horváth on Monday morning that she is dismissed with effect from 30 April. The PM's action creates a news situation in the local political arena, since the move is considered by the liberals as a crude violation of the coalition agreement.
Skandinaviska Enskilda Banken (SEB) interpreted Gyurcsány firing his health minister as a halt in the important but unpopular health reforms.
“This puts the government's reform agenda in jeopardy and may also split the government coalition," analysts of the Swedish bank commented on Monday.
Today the Free Democrats will meet to discuss the issue.
“The news should be negative both for the forint and bonds," the SEB added.
The implications of Horváth's dismissal are rather uncertain.
The PM arguably wanted to act quickly so that the SZDSZ wouldn't have time for a similar “coup" they organised in 2004, which cost PM Péter Medgyessy his position. If Horváth's sacking creates three possible scenarios:
- a deal is made with the SZDSZ;
- SZDSZ steps out of the coalition, the MSZP continues to govern in minority;
- if the latter fails to work out, early elections are called.
The liberals do not have enough time to forge deals with “rebellious" Socialists and organise Gyurcsány's replacement.
Hungary's forint eased from Friday's 257.60 against the euro to 259.60 by around 09:00 CET on Monday."
Source: Portfolio Online Financial Journal
31.03.2008