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Hungary's Gyurcsány predicts referendum will fail

Hungarian Prime Minister Ferenc Gyurcsány said he expects a referendum called by the opposition to fail, enabling him to push ahead with policies designed to narrow the budget deficit.

Gyurcsány has raised taxes and cut subsidies to trim the shortfall. There is „no great pressure” from the public to modify the austerity measures, Gyurcsány told reporters in Budapest yesterday. He said he is confident that the Socialist Party will back him through to the end of his term in 2010 and that the party will regain public support in time for the next election. The government lost local elections on October 1. „We have reason to believe that the referendum won't be successful,” Gyurcsány said. „I will take this reform to its successful conclusion, I will take the austerity measures to their conclusion and I will keep my party's support in 2010 as well.” Gyurcsány is cutting spending on such things as university tuition and drug subsidies to help lower the budget deficit from an estimated 10.1% of gross domestic product this year to 6.8% next year.

The largest opposition party Fidesz on October 23 demanded a national vote within five months to block key parts of Gyurcsány’s economic program. The referendum would ask voters if they agree with plans to impose a tuition fee at state universities, to sell hospitals to private companies, to allow supermarkets and gas stations to sell medicines, and to charge a fee to visit a doctor. „I'm not desperate at all,” Gyurcsány said. „This will force everyone to voice their reasoning clearly. We will face this challenge, we will use all possible means to explain ourselves.”

„The moderate policy of modernization will win in Hungary in 2010,” he said. „We don't have to scour through the opinion polls every day. Let's not worry about that. We have to govern for the next three and a half years, then we can campaign.” The premier said he won't make exceptions to an increase in corporate income tax. The increase was criticized by Volkswagen AG's Audi luxury car unit, which threatened to halt investment in Hungary. Talks with Audi continue, he added. Audi, Hungary's largest exporter, on October 20 said it suspended future spending in Hungary because of the higher tax. The company was previously exempt from taxes through 2011. (Bloomberg)