OF COURSE Ferenc Gyurcsany should stay as Prime Minister. It will be a disaster for Hungary’s hopes of economic reform if he quits.

His stroppy remarks to his party leaders were provocation of limitless resonance. His many enemies, who dislike his flashy style, his marriages, his policies — everything about him — rose with glee to that provocation and urged the rioters into the streets.

But if he lied it was in the sense that George H. W. Bush did in saying: “Read my lips”: promising not to raise taxes, and then doing just that. If Hungarians claim that he kept them ignorant of the terrifying state of national finances, then they are the only ones on the planet not to have known.

Hungary has been living on borrowed time, buoyed up by the cheery view that Western Europe has taken of the fortunes of the former Soviet bloc countries. That has allowed it to borrow money more cheaply than its horrendous national debt would normally dictate.

Those figures are no secret. The financial markets, and Brussels, have been sceptical about the Government’s repeatedly revised plans for getting its finances into good enough shape to join the euro.

“I admit, in the past four months [since the general election], I failed to convey the message about the need for reform,” Gyurcsany said yesterday. To whom? Hungarians? Then they must have had their hands over their ears.

Since his electoral success, he has announced tax rises and budget cuts — the minimum necessary — and his reliance on raising a lot of new revenue has met with scepticism. A report this month by the Economist Intelligence Unit observed: “Tax morality in Hungary is relatively low.” Indeed.

The Prime Minister aimed one part of his self-flagellation accurately: the Government missed good opportunities to push through change in the past four years when it would have been easier. Growth has been strong and exports rose by 17 per cent in euro terms in the year to May.

That is a reminder that in many ways Hungary’s popular image as one of the solidest of the ten countries that joined the EU on May 1, 2004, is well founded. Its manufacturing is broadly based, its governments have been centrist and sensible; its people are educated and outward-looking. It is a sophisticated and confident country.

But the causes of its budget deficit go back a long way. Voters have not wanted to give up state jobs or benefits from the past, while their expectations of their Government have risen with modernisation.

The danger now is that loss of confidence in the reforms would cause the forint to slide. That could push up interest rates and make debt even more costly. “The coalition [Government] has the support of the market and of credit rating agencies as a result of the push for reforms,” says Raffaella Tenconi, emerging markets analyst at Dresdner Kleinwort.

The rioters cannot claim that Hungary’s problems are news. If every leader who had ever put a good spin on bad figures were to quit, this week’s UN General Assembly would be a very small affair.

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