By Kester Eddy in Budapest and Neil Buckley in London – Financial Times

Hungary’s government is trying to introduce legislation that would allow the state to charge three former prime ministers with “criminal” mismanagement of economic policy after the national debt spiralled upwards in the last decade.

In a step that could provoke alarm among officials in other heavily indebted countries, the centre-right Fidesz government is targeting three former socialist premiers who goverened from 2002-10, and potentially their finance ministers. State debt rose over that period from 53 per cent of gross domestic product to 80 per cent.

Opposition parties have denounced the move as the latest attempt by the government of prime minister Viktor Orban to undermine its socialist rivals and entrench its power, after winning a two-thirds parliamentary majority last year. But if successful, it could set an international precedent by holding officials criminally responsible for the results of their policies.

The attempt has some parallels with the situation in neighbouring Ukraine. Yulia Tymoshenko, the former prime minister, is standing trial – seen by her supporters as politically motivated – over a 2009 gas deal she signed with Russia that prosecutors say caused damage to the state of $190m.

Hungary’s move follows a parliamentary probe initiated by Fidesz members into the economic policies of Peter Medgyessy, Ferenc Gyurcsany and Gordon Bajnai, prime ministers during the period concerned.

The investigation, concluded at the weekend, proved the socialist-led coalitions had “committed a political crime against Hungary” and should be held responsible, said Peter Szijjarto, Mr Orban’s spokesman and the deputy chairman of the committee responsible.

Mr Gyurcsany, Hungary’s premier in 2004-09 and widely seen as the prime target of the government’s attempts to bring charges, denies wrongdoing and questions the legality of retroactive legislation.

“This criminalisation action, making it retrospective, raises many questions. I cannot see how it is lawful. This is part of the complicated political game led by Fidesz [to discredit me],” he told the Financial Times.

Mr Gyurcsany has previously admitted that his decision to continue high-deficit spending policies in his first years was economically flawed. But he argues the trend began with the first Fidesz administration, in 1998-2002, when the government started subsidising mortgage loans.

Mr Gyurcsany said there was Ft1,900bn (?7bn) in extra spending, above budget targets, in 2000-10. Mr Orban’s Fidesz government was responsible for about Ft600bn, and socialist governments the rest, he said.

Fidesz can expect to get legislative changes through parliament, which it dominates, but these could be challenged by the constitutional court. Mr Orban has shown, however, that he is willing to override the court, which now includes several pro-Fidesz judges.

Explore and contextualise the burden of public debt across both advanced and emerging economies and economic groupings

Szabolcs Kerek-Barczy, executive director of the Freedom and Reform Institute, a right-leaning think-tank, said the government moves were “unprecedented, unacceptable and undemocratic”, and could further erode confidence after government measures last year upset many foreign investors.

“If anybody’s past public policy and/or political activities can be questioned and then retroactively punished it means that any past economic or political decision can also be annulled. If we [allow] retroactive lawmaking in this country, nobody can feel safe,” Mr Kerek-Barczy said.

Mr Gyurcsany is particularly loathed by Hungary’s rightwing after a leaked tape of an internal party address in which he confessed the socialists had lied “morning and evening” for one and a half years about their record, in order to secure re-election in April 2006.

Publication of the recording, in which he urged socialist MPs to face up to painful reforms of the economy and public services, in September 2006 sparked demonstrations in Budapest that turned violent.

By Kester Eddy in Budapest and Neil Buckley in London – Financial Times