UPDATE: Hungary PM Gyurcsany Calls For New Government, New Premier

Battered Hungarian Prime Minister Ferenc Gyurcsany unexpectedly tendered his resignation Saturday calling on his Socialist Party to set up a new cabinet headed by a new premier so that the necessary reform process can be carried out with wider support. "If I'm the obstacle to change, then I'll eliminate this obstacle," Gyurcsany said at a conference of the ruling Socialist Party. The Socialists, who govern in minority, will hold an extraordinary party congress April 5 when they'll name their new prime minister candidate, Socialist Member of Parliament Monika Lamperth said Saturday. Gyurcsany proposed that the Socialists inform parliament about his decision Monday and that they start negotiations regarding the person of the new prime minister. The Socialists "have scenarios for (naming) a new prime from either within the party or from the outside," state news service MTI quoted Socialist Parliamentary Caucus Leader Ildiko Lendvai said Saturday. MTI said Gyurcsany wants to call a no-confidence vote in Parliament against himself and his cabinet, but the agency didn't name sources. Under Hungarian legislation, one-fifth of MPs have to back a no-confidence vote and they also have to name their candidate for the prime ministerial post. If the majority of Parliament express their lack of confidence in the prime minister, the proposed premier automatically becomes the new head of government. Gyurcsany's minority Socialist government has faced street protests for years while it struggled to implement fiscal measures. "I hear messages that I'm the reason why there isn't sufficient social coherence, a stable governing majority and a sober opposition," Gyurcsany said in a speech. Gyurcsany, who was the first prime minister to be reelected to the post since Hungary's return to democracy in 1990, admitted to having made several mistakes in his recent years as head of government and said his credibility had been severely marred by these mistakes. "I have been mistaken regarding our power and our possibilities, in moments of great importance I've failed to speak up clearly, my credibility has therefore been seriously damaged," the prime minister said. A speech delivered by Gyurcsany to a closed Socialist Party meeting in October 2006 sparked mass protests in Hungary as the prime minister had admitted his government had lied "night and day." Gyurcsany's and the government's popularity has been on the decline ever since and nose-dived in recent months as the global economic crisis hit Hungary in full force. In a poll published earlier this week by pollster Median, 91% of Hungarians said that the country was headed in the wrong direction. Hungary has entered an economic recession in the last quarter of 2008 and the government projects this year's economic contraction at 3-3.5% while analysts believe the recession could be as deep as 4-5%. Gyurcsany's move is likely to shake domestic financial markets, which have been under selling pressure since October 2008, when the global financial crisis hit Hungary severely. The government was forced to secure a $25 billion credit facility from the International Monetary Fund, the World Bank and the European Union to secure the country's financing. In his speech Saturday, Gyurcsany stressed that the government should continue the reform process.