Hungary’s prime minister announces resignation

BUDAPEST (AP) — Hungary’s prime minister stunned the country Saturday by announcing his resignation because he had become an “obstacle” to the reforms needed to pull the country out of its worst financial crisis since the end of communism nearly 20 years ago.

Ferenc Gyurcsany, of the ruling Socialists, made the unexpected announcement at his party’s congress, saying he was keeping a pledge made in January 2008 to change the leadership if the embattled party’s popularity failed to recover.

“Support for us has not grown. On the contrary, it has diminished,” Gyurcsany said. “I propose forming a new government with a new prime minister.”

The Socialists have governed with a minority in parliament since May, when a coalition partner walked out unsatisfied with Gyurcsany’s commitment to reforms.

In the meantime, Hungary is struggling to deal with the global financial crisis and has received $25.1 billion in loans from the International Monetary Fund and other institutions.

Investors’ confidence about the country’s ability to meet debt payments has substantially weakened the Hungarian currency, the forint, preventing the central bank from lowering interest rates to help boost the economy, which is expected to shrink by as much as 5 percent in 2009.

Gyurcsany’s reputation was badly damaged in 2006 when state radio broadcast a speech he made at a party meeting admitting he lied about the state of the economy to win elections a few months earlier. The broadcast sparked weeks of protests and riots that left hundreds injured.

“I’m being told that I myself am the obstacle to the cooperation and stable government majority needed to implement changes,” Gyurcsany told party members Saturday.

Gyurcsany seemed to be hedging his bets, however. Hours after saying he would resign as prime minister, he was re-elected chairman of the Socialist Party with more than 80 percent of the votes.

The post gives him a say in choosing the next prime minister, who would then need parliamentary approval.

Gyurcsany said he would notify parliament of his decision today, and called for a meeting of Socialists in two weeks to choose a candidate to head the new administration.