Hungary PM reshuffles gov’t after coalition split

“Our government program doesn't change but the emphasis changes, the structure changes and the personnel change,” Gyurcsány told a news conference.

“Emphasis in the next two years will be on growth, development and job creation,” Gyurcsány said.

Bajnai, a young businessman, is seen as a close ally of Gyurcsány and has been named by some newspapers as a potential successor to the prime minister if he is replaced.

Analysts said Bajnai's appointment signals a commitment to the budget deficit cuts needed to get Hungary into the euro currency and to stabilize the country's economy.

It does not however show that Gyurcsány is ready to tackle difficult issues such as reforming labor, health and education in the remaining two years of the Socialists' term in office.

“The prime minister wants to signal a continuity in governing, but for a new beginning, a new program would be needed along with new faces,” says Zoltán Kiszelly, a political analyst.

Székely, who will head the health post, faces a tough challenge after reforms in the sector were stalled by an opposition-sponsored referendum last month which abolished medical fees, key elements of the reform.

The ministry is also facing an uphill battle in reestablishing its credibility as the failed reform process and battles with the medical profession tarnished its reputation.

It was the sacking of the health minister from the small SzDSz last month which caused the coalition to split.

Gyurcsány also created a new post for research and development as well as transport, telecommunications and energy policy, which previously belonged to the economy ministry.

He also picked new ministers atop the environment, labor and local council posts.

The departure on Sunday of the liberals, who have 20 members in the 386-strong parliament, has caused concerns that the Socialists, with 190 seats, will return to their spendthrift ways ahead of elections due in 2010.

The government which held power in 2006 racked up a budget deficit of 9.2% of gross domestic product in that year and although the deficit has been cut to 5.5% of GDP it is still the biggest in the European Union.