(Agencies)
Updated: 2008-03-18 09:11

BUDAPEST, Hungary - Hungary's parliament on Monday repealed three health and education fees overwhelmingly rejected by voters in a recent referendum.

On March 9, more than 80 percent of voters rejected the fees, which had been introduced last year for doctor visits, hospital stays and university tuition.

Lawmakers voted 199-1, with 149 abstentions, to eliminate the two health fees introduced last year and to refrain from collecting university tuition fees, which were to be introduced later this year. Most members of the government parties supported the decision, while the center-right opposition abstained.

The referendum was seen as a political setback for Socialist Prime Minister Ferenc Gyurcsany and his government's economic reforms meant to lower Hungary's state budget deficit, the largest in the European Union over the past few years.

Some analysts worry that Gyurcsany is under pressure from his coalition-leading Socialist Party to water down reforms to win back voters ahead of next year's European parliamentary elections and the 2010 national ballot.

On Monday, Gyurcsany described the outcome of the referendum as "the most contradictory and damaging decision" since 1990, saying it could have negative effects on Hungary's economy.

"The question is, how much all of this is going to cost," Gyurcsany told lawmakers, saying the delay of needed reforms could keep foreign investors away from Hungary, damage the Hungarian currency - the forint - and lead to higher interest rates.

The Standard & Poor's credit rating agency last week downgraded Hungary's outlook to negative from stable due to fears of a loosening fiscal policy and growing opposition to budget reforms.

S & P said these factors would "interrupt Hungary's progress in reducing its deficit from 2009" and that the results of the referendum confirmed "fading appetite among Hungarians to continue with the consolidation process."

As they have been doing for the past 18 months, deputies from Fidesz, the main center-right opposition party, walked out of the legislature during the prime minister's speech.

Fidesz declared Gyurcsany as a persona non grata after he was heard admitting on a recording leaked to state media in September 2006 that he and the government had lied about the economy to win re-election in April that year.

Weeks of protests and several riots ensued, and since then police have clashed on some national holidays with small, radical right-wing groups demanding Gyurcsany's ouster. Recent polls have shown Gyurcsany's approval rating sink as low as 15 percent.

The state budget would not be affected directly by the elimination of the health and education fees on Monday, but it would reduce revenue for family doctors, hospitals and universities. Fidesz wants the government to compensate people who lost revenue with the referendum, but Gyurcsany says the government doesn't have the means or intention of doing that.