Hungary parliament elects new PM

Gordon Bajnai has said his cabinet will include ministers from all sides

Hungary's parliament has formally endorsed Gordon Bajnai as the country's new prime minister.

Mr Bajnai, a non-aligned figure who had been serving as the economy minister, replaces Ferenc Gyurcsany.

Mr Gyurcsany announced his decision to resign in March, saying he considered himself a hindrance to further reforms.

Hungary has been badly hit by the global economic crisis, and needed a $25.1bn (£16.9bn) IMF-led rescue package last year to avoid collapse.

Last month, Mr Bajnai said quick and credible reforms could restore investor confidence and put Hungary back on track towards the euro.

Welfare cuts

The BBC's Eastern and Central Europe correspondent, Nick Thorpe, says Mr Bajnai is a quiet, reserved man who sometimes plays goalkeeper for a fourth division football team.

If we do not act immediately and drastically, then we cannot avert bigger trouble

Gordon Bajnai
Hungarian Prime Minister

The 41-year-old businessman's friendship with the flamboyant Mr Gyurcsany first won him a place in the cabinet two years ago, our correspondent says.

But a squabble between the governing Socialists and their former coalition allies, the Free Democrats, over the choice of a new prime minister, opened his path to the top job, he adds.

Mr Bajnai will need all his skills as an economist, and a goalkeeper, to carry it out, our correspondent says.

Analysts say Hungary is heavily dependent on the IMF-led loan, which was secured last November, to finance its massive state debt.

The new prime minister has said he will cut welfare payments, including pensions, maternity and child-care benefits, in an effort to cut public spending and meet the conditions of the loan.

"If we do not act immediately and drastically, then we cannot avert bigger trouble," he warned last month.

"The implementation of the programme will hurt, it will demand sacrifices from many... it will affect every family and every Hungarian but it will have results."

The main opposition conservative party, Fidesz, proposes a stimulus package instead of austerity measures, and wants early elections.