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Hungary's unpopular prime minister resigns amid financial crisis

BUDAPEST — 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 dissatisfied with Gyurcsany's commitment to reforms.

Hungary is struggling to cope with one of the most troubled economies in Europe. It 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.

Gyurcsany's reputation was badly damaged in 2006 when state radio broadcast a speech he made admitting he lied about the state of the economy to win elections a few months earlier. The broadcast sparked weeks of protests and riots.

Gyurcsany seemed to be hedging his bets, however. Hours after saying he would resign as prime minister, he was re-elected chairman of his party with more than 80 percent of the votes. The post gives him a say in choosing the next prime minister.

Hungary's unpopular prime minister resigns amid financial crisis 03/21/09 [Last modified: Saturday, March 21, 2009 8:57pm]
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