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Hungary PM refuses to resign amid anti-government riots

Hungarian Prime Minister Ferenc Gyurcsany defied opposition pressure to quit after anti-government riots he called "the longest and darkest night of the republic" left 150 people injured.

The worst riots in Hungary since the end of communism followed the leak of a tape on Sunday in which Mr Gyurcsany said he and his Socialist party had lied for four years about Hungary's budget in order to win a general election in April.

Thousands of people took to the streets of the capital Budapest late on Monday, attacking the state television building in clashes which left 150 police and protesters injured.

Higher taxes and fees for health care and university tuition had prompted protests before the release of the tape sparked the violent backlash.

On Tuesday, about 500 anti-government demonstrators began a new protest outside parliament.

Police presence appeared light.

The protests came two weeks ahead of local elections on October 1 and follow a slump in the ruling Socialist Party's popularity to 25 per cent in polls from 40 per cent at the election.

Monday's demonstration by around 10,000 people in front of parliament turned violent when some protesters stoned and set fire to the state television building, occupied part of it and looted it.

'Moral crisis'

The main Fidesz opposition urged the Prime Minister to go amid what it called a "moral crisis" while Ibolya David, leader of the smaller Hungarian Democratic Forum, told MTV "the prime minister should abandon public life".

However, Mr Gyurcsany, facing the biggest challenge in his two-year premiership, received backing from his Socialist Party to stay on and implement his economic policies.

"The job of the institutions of the republic is now to strengthen people's faith that calmness can be restored," Mr Gyurcsany said.

Mr Gyurcsany also retains the support of coalition partner, the alliance of Free Democrats.

The Prime Minister won April's election partly on a promise of tax cuts but has since imposed tax rises and benefit cuts worth $US4.6 billion in 2007 alone to curb Hungary's budget deficit which will surge to 10.1 per cent of gross domestic product this year.

Financial concerns

Investors who hold billions of dollars of Hungarian bonds are worried that Mr Gyurcsany may be forced out of office or to abandon his economic policies, which most economists see as the only way to rescue the country's strained finances.

Financial markets remained concerned that there would be more riots which could push the government to abandon parts of planned fiscal austerity measures.

Ratings agency Standard & Poor's said Hungary's BBB-plus credit rating, which is on a negative outlook, was not under any immediate pressure due to the riots.

"This is not immediately affecting the rating at the moment," S&P credit analyst Kai Stukenbrock told Reuters but added if the government abandons plans to cut the budget deficit it could "quite quickly put downward pressure on the rating".

- Reuters

http://www.abc.net.au/news/newsitems/200609/s1744856.htm