Hungary's Ruling Party Picks Premier

Edith Balasz, Charles Forelle

The Wall Street Journal

March 30

Hungary's ruling Socialist Party nominated economy minister Gordon Bajnai to become the country's next prime minister, a step that would put him in charge of pressing tough spending cuts to pull Hungary from the brink of fiscal crisis.

Reuters

Gordon Bajnai was picked by the ruling Socialists to replace Prime Minister Ferenc Gyurcsány.

Mr. Bajnai, a close associate of outgoing Prime Minister Ferenc Gyurcsány, said at a news conference on Monday that the reforms needed would "have an impact on all Hungarian families and every Hungarian."

The economy "has no extra months to waste before implementing measures that radically change the way the government works," said the 41-year-old former businessman.

The main task for the prime minister-designate, who would take office April 14, will be to cut public spending, particularly on state employees and on social programs such as pensions. Crisis struck in October when Hungary was unable to sell bonds to finance those deficits.

An emergency lifeline from the International Monetary Fund and other bodies has helped the country pay its bills for the time being. But those failures eventually felled Mr. Gyurcsány.

On Monday, rating agency Standard & Poor's cut Hungary's debt to triple-B-minus, its lowest investment-grade rating, saying that the IMF support was "significant yet finite" and that Hungary still faced deeply entrenched problems. The agency predicted a 6% decline in Hungary's gross domestic product this year.

After S&P's move, buyers fled the government-bond market and the forint weakened against the euro, to 311.25 forint to the euro in afternoon trading, up 2.15% on the day.

Mr. Bajnai's nomination ends a week of scrambling to find a new prime minister and avoid early elections. The ruling Socialist Party and the liberal SZDSZ party had trouble agreeing on a successor after Mr. Gyurcsány offered his resignation March 21. Under Hungarian law, Mr. Bajnai would become prime minister if a no-confidence vote against Mr. Gyurcsány succeeds in Parliament.

Write to Edith Balazs at edith.balazs@dowjones.com and Charles Forelle at charles.forelle@wsj.com

See also:

Gordon Bajnai's CV