Huge HUF Hole in Newly Approved Budapest City Budget

  • 15 Dec 2022 10:13 AM
  • Hungary Matters
Huge HUF Hole in Newly Approved Budapest City Budget
The Budapest General Assembly adopted the 2023 budget on Wednesday, projecting 407.8 billion forints (EUR 990.3m) in revenues and 465.3 billion in expenditures.

The deficit will be covered from loans, bonds and revenues from bank deposits. The budget has allocated 6.94 billion forints for paying back loans and 773.4 million for domestic financing.

The budget was adopted with 17 votes in favour, 11 against and 2 abstentions. The draft pointed to rising government contributions, rising energy and food prices, wage pressure due to inflation and the “consequences of monetary policy” as the main difficulties in 2023.

Referring to a 58% raise of the solidarity contribution, the draft said: “Rising government contributions are a product of … bad government policy and finding a solution is a matter of political will.” Volatile energy prices are the greatest risk in 2023, “the additional expenditures due to energy prices are currently impossible to pay or to calculate,” it said.

A preliminary impact study showed next year would be “critical, but public tasks are manageable and public services can be maintained”, the draft said.

However, in order to handle the risks inherent in the draft budget, the municipality is counting “on a change in the government policy regarding local authorities” or is anticipating a review of the budget in May 2023, it said.

During the debate, deputy mayor Ambrus Kiss said the budget was not “on a firm footing”. The municipality will not launch new investments in 2023 and defer whatever spending they can to 2024, he said.

Mayor Gergely Karácsony said the budget was “hardly a joy, but to have a budget in an extremely unstable situation means we have the rudder and are trying to navigate”.

Gábor Bagdy of Fidesz-KDNP said the budget had a hole of 120 billion forints, and insisted the municipality would go bankrupt mid-year or would be forced to clip public services. That makes the budget “unacceptable”, he added.

“The municipality has been bled dry, its reserves are empty, and the budget before the assembly is basically for the next quarter only,” he said.

Norbert Élő of the Democratic Coalition (DK) said the municipality had no room for manoeuvre, “the city will fight for survival next year”.

MTI Photo: Szilárd Koszticsák

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