Embattled PM Gyurcsany offers to step down

AFP - Hungarian Prime Mininster Ferenc Gyurcsany proposed to step down to allow the formation of a new government in a speech at the congress of his Socialist Party on Saturday.

"A new government and a new prime minister is needed in Hungary," Gyurcsany said according to Hungarian newswire MTI. "I propose the formation of a new government with a new prime minister," he added.

"I was wrong about our strengths and opportunities and in an important moment I failed to speak clearly, as a result my credibility has been tainted significantly," Gyurcsany told party members.

Hungary is among eastern European countries hardest hit by the financial crisis.

Gyurcsany, 47, asked the party congress to entitle the chairman, the board and the head of the parliamentary group to prepare the naming of a new prime minister.

He said he would inform Parliament on Monday and proposed to elect a new prime minister at an extraordinary congress of his Hungarian Socialist Party in two weeks.

The congress, shortened to one day instead of the originally planned two days, must elect a new leadership later Saturday. Gyurcsany remains the sole candidate for the position of party chairman.

As head of a Socialist government which has not had a majority in Parliament for the last year, Gyurcsany did not name any possible successor but said that the new prime minister should be found through coordination with the parties in represented in Parliament.

Reforms of the education, health care and social security systems must be continued, he added.

Re-elected for a second term in 2006, Gyurcsany has pushed belt-tightening measures to bring down a skyrocketting budget deficit of 9.2 percent of gross domestic product (GDP) in 2006 to 3.3 percent of GDP in 2008.

However, the austerity programme led to a rapid loss of support which culminated in the breakup of the governing Socialist-Liberal coalition in April 2006, over disagreements on the pace of reforms.

While the Liberal party left the coalition, it continued to support government proposals in Parliament.