About Hungary

Political Structure

Hungary is a parliamentary republic based on an amended version of its 1949 Constitution. The Head of State is the President who is elected through a two-thirds majority vote by Parliament for a term of five years. If no two-thirds majority is reached, then a simple majority is sufficient in the third round of the election. No president may serve more than two terms in office. The role of the President is largely ceremonial, but also includes powers such as appointing high-ranking officials and choosing the date for Parliamentary elections. Nominally, the President is also the Commander in Chief of the Armed Forces. The current President is Dr. László Sólyom, elected on June 7, 2005, who served as President of the Constitutional Court in 1990-1998. He was sworn into office on August 5, 2005.

The 386-seat unicameral National Assembly (the Országgyûlés) is the highest organ of state authority and is elected by means of a mixed system of electorates: 176 seats are to be elected in single-seat districts, or constituencies, 210 seats through regional and national lists drawn up by the competing parties. The Hungarian electoral system calls for two votes: one vote is cast for a candidate from an individual constituency, and another vote for a party from the regional lists. In individual constituencies, the nomination of at least 750 voters is required for candidacy. A political party may establish a regional list if it fields candidates in at least 25 percent of the individual constituencies in that county; at least seven regional lists are required for a national list. The system requires a five-percent threshold for a party to enter into Parliament. 

The National Assembly elects a Prime Minister based on the principle of a parliamentary majority, concurrently approving the government program. Parliamentary elections are held every four years, with next elections expected to take place in 2010. The Prime Minister has a leading role in the executive branch in selecting the Cabinet ministers and in retaining the right to dismiss them.

The judiciary is independent of the executive and the legislative branches. An eleven-member Constitutional Court has the power to challenge legislation initiated by the National Assembly on the grounds of unconstitutionality.

Economic Situation

After a major privatization drive which occurred during the mid-1990s, the private sector now accounts for approximately 80% of the economy. Inflation and unemployment remain relatively low at  2.3 and 7.2% respectively though there remain problems with sizable balance-of-payments and government deficits, which are having an impact on the Hungarian forint (HUF).

Following their re-election in the April 2006 vote, the Gyurcsány government is expected to introduce reforms aimed at reducing a government deficit, which at 6.1% of GDP is the highest in the European Union.  This situation poses a problem for the government’s ambitious plans to join the Euro zone by 2010, a plan which requires that the state budget deficit not exceed 3% of GDP.  

Despite this, Hungary has a history of private sector activity, legal protections and an educated workforce. It continues to attract foreign direct investment (€3.5 billion in 2005, not including privatizations), which is a major engine of economic growth.  Hungary's location in Central Europe makes it a natural trading nation. Trade in goods and services totalled 130% of GDP in 2002 with machinery and electrical equipment making up over half of total exports. Not surprisingly, Hungary's main trading partners are in Europe, starting with Germany, followed by Italy and Austria.