"I hear that I am the obstacle to the cooperation required for changes, for a stable governing majority and the responsible behaviour of the opposition," Gyurcsány told MSZP activists. "I am now lifting this obstacle," he added.
The PM's announcement was unexpected even among the most experienced political analysts.
The next parliamentary elections are scheduled for mid-2010. Instead of holding early elections, lawmakers are to elect Gyurcsány's successor in a vote on 14 April. The new prime minister will need the support of the centre-right opposition.
The weekend was filled with speculation over the identity of the new PM-designate, but the Socialists have remained vague so far. Andras Simor, president of the Hungarian National Bank, was among the names mentioned over the weekend.
Indeed, as the financial and economic crisis deepens, the MSZP appears to be looking for an expert capable of lifting the country out of the economic turmoil.
A member of the Hungarian government told EurActiv that the new PM "will not come from the political sphere". "It won't be exactly a professional government," the source said.
However, the Socialist candidate's name will not be announced until 6 April, after consultation between the MSZP leadership.
Gyurcsány himself did not exclude the possibility of a wider coalition, he told national TV yesterday, but the right-wing party Fidesz rejected this option. The Socialists also rejected the candidate proposed by the centre-right Hungarian Democratic Forum (MDF), Lajos Bokros, saying he cannot be taken into consideration as he is being lined up for the European elections (EurActiv 03/03/09).
Fidesz and MDF are pushing for early elections to be held in parallel with European elections on 7 June, but it is doubtful that they will achieve this goal.
Meanwhile, Hungary's currency, the forint, fell to unprecedented lows against the euro.
PM's resignation follows similar moves in Latvia, Lithuania and Iceland
The 47-year-old Hungarian premier is not the first political victim of the widening recession in Europe's emerging markets.
Latvia's government resigned last month (EurActiv 27/02/09) as the economic contraction sparked rioting, while the Lithuanian administration that presided over the Baltic nation's economic decline was turfed out in elections in the autumn.
Iceland's government also collapsed as a result of the global economic crisis. Belgium has also elected a new government since the crisis hit Europe, although the context there was more complex.
