[1] On 25 August 2004, he resigned over disputes with coalition partner Alliance of Free Democrats, but remained as acting prime minister for a 30-day period as required by the Constitution, and a few additional days until his successor Ferenc Gyurcsány was confirmed by the National Assembly.

[5] Magyar Nemzet, a newspaper affiliated with Fidesz, revealed in June 2002 that Medgyessy had been acting as a counterespionage officer under the code name D-209 in the III./II.

He admitted to being a secret agent, saying that in the line of duty, he strived to secure Hungary's membership in the International Monetary Fund, which the Soviet Union was opposed to.

In the aftermath of these events, demonstrators blocked traffic across the Elisabeth Bridge and demanded that a new tally of the parliamentary election results be conducted.

To implement it, the Medgyessy government announced a 100-day action program that provided a 50% increase of wage to public employees and a one-time HUF 19,000 allowance to pensioners.

[10] In early 2004, Medgyessy proposed a joint electoral list with the participation of all parliamentary parties for the European Parliament election.

The MSZP accepted his resignation, which took effect on 25 August, and in accordance with the Hungarian Constitution he became "acting Prime Minister" for the next 30 days.

[14] Medgyessy was ridiculed by certain segments of the Budapest press because of his allegedly weak rhetorical abilities; a book titled Medgyessyizmusok (Medgyessyism, in analogy to Bushism) appeared in 2004.

Investors considered his decision to be incomprehensible and a flawed piece of economic policy, causing them to sell forints and Hungarian government bonds, which led to significant interest rate hikes by the National Bank of Hungary.

Economists criticised this move, calling it an irresponsible drain on the budget that amounted to nearly 190 billion forints,[16] and hypothesised it was done purely to increase the administration's popularity.

[17] During Medgyessy's prime ministership, political attacks were launched against some independent senior civil servants who had been appointed by the Orbán cabinet.

The chief of the Hungarian Financial Supervisory Authority was removed without legal challenge, though without any material basis related to his performance in office.

[22] Medgyessy was interviewed by Index on the tenth anniversary of his resignation on 27 August 2014, where he called Gyurcsány a "Trojan Horse" and "traitor".

[citation needed] According to Medgyessy, he was removed from the position of Prime Minister after a secret agreement between MSZP and SZDSZ leaders László Kovács, Ildikó Lendvai, Katalin Szili and Gábor Kuncze.

[23] He received the Commander's Cross with a Star of the Hungarian Order of Merit in 1998, and the highest French decoration, the Chevalier of the Legion of Honour in 2000.