The Prime Minister’s possible resignation, announced over the weekend, is not a market negative, but the sole driver of the longer-term market reaction will be the very personality of the successor and their credibility, London-based emerging markets analysts said.
4cast, a leading City-based economic forecaster and consultancy, said “it was more than clear” that the Gyurcsány government was unable to address the pending structural issues of the budget, so the fact that the Prime Minister offered to step aside “is definitively not a negative development.”
While it is usually true that first a program is needed and then it is needed to agree on the person who will get it done, in this case “we believe the opposite is true as the person will be the program itself.” 4cast said that Hungary ideally needs two things “to get out of the mess.” One is an immediate cut in budget expenditures that reduces the financing need of the budget.
Neil Shearing, Central European economist at Capital Economics, a London-based consultancy, told Econews that Lajos Bokros, a former finance minister famed for his “Bokros package” of sweeping stabilization measures implemented in the mid-1990s, could be this person. Shearing said that “if we get Bokros in, it (Gyurcsány’s resignation) can be a market positive ... (Bokros’s) reputation speaks for itself.” (Reuters)