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M. Continuo

Hungary PM to shake up govt in two weeks - web site


    BUDAPEST (Reuters) - Hungary's Prime Minister Viktor Orban will reshuffle his government within the next two weeks and plans to appoint a close political ally to deal with the International Monetary Fund if Budapest overcomes an impasse and formally launches talks with the fund, web site origo.hu reported on Tuesday.

    Citing several unnamed sources close to the ruling Fidesz party, the website said Orban would appoint a new minister in charge of healthcare and education as well as new heads of his own office and the ruling Fidesz party's parliamentary group.

    The Fidesz cabinet has prompted protests from foreign governments and business to two years of policy that critics say have undermined Hungary's democratic institutions, but Orban's domestic ratings remain stronger than those of his rivals even if voters say the country is on the wrong track.

    Brussels' objections to several laws have also blocked talks on an EU/IMF financial backstop, with analysts increasingly suspicious Orban is not serious about a new deal a year after he walked away from earlier discussions.

    The government says it is doing everything in its power to begin formal talks and Origo.hu reported that if the two sides do formally come to the table, Orban would replace the minister currently in charge, Tamas Fellegi, with former finance minister Mihaly Varga.

    Varga, currently the state secretary heading the prime minister's office, has credibility with financial markets and with international partners, analysts said. He also has more political weight than Fellegi.

    But Citigroup analyst Eszter Gargyan said the changes in the government line-up would be no guarantee of progress.

    "It could be positive but there is a risk that this is just yet another communication tool to pretend (we) are getting close to the start of negotiations on financial assistance," she said.

    Orban will only reshuffle the IMF/EU negotiating team once there is palpable progress on the loan talks, origo.hu said.

    The reorganisation will not affect the responsibilities of Economy Minister Gyorgy Matolcsy, architect of the government's economic policies, the web site added, a sign that Orban will stick to his guns on the economy.

    "As long as Economy Minister Matolcsy is in his position, there will be no meaningful shift in economic policy I think," Gargyan said.

    Government spokesmen declined to comment on the report, with an official from Orban's office saying only that it was "guesswork".

    (Reporting by Marton Dunai/Krisztina Than; editing by Patrick Graham)