Has Orbán over-reached?

„Alarm bells are ringing ever louder in Hungary. Since winning an unprecedented two thirds parliamentary majority in April's election, the ruling Fidesz party has systematically taken over the country’s previously independent institutions: the presidency, the state audit office and the media council are now all run by party placemen and women. Last week parliament voted to severely restrict the constitutional court’s right to adjudicate on budgetary matters. The government even wants to force investors in private pension schemes back into the state system to meet budget targets. Refuseniks could lose up to 70% of their pensions.

But the latest power grab may be a step too far. A Fidesz MP, József Varga, has introduced legislation to cut the budget of the Fiscal Council, the independent watchdog charged with monitoring the budget, from 835m forints ($4m) to 10m, in effect killing it off. Mr Varga says the funds should be diverted towards measures to help integrate Hungary’s Roma minority. (The MP says he has no view on whether the Council should exist or not, but he is sure that its members are »well-paid bankers«.)

The move has sparked anger and confusion. Not from the political opposition, which remains weak and fractured, or the public, among whom the government retains overwhelming support. The problem is the potentially destabilising message to the markets: Hungary will no longer enjoy any credible independent domestic oversight of fiscal policy. That will erode investors’ confidence—already battered by the imposition of »crisis taxes« on the banks, telecommunications, energy and retail sectors—and could trigger a slide in the value of the forint.”