The government bill is aimed at ensuring the city receives an instant loan if it cannot pay the salaries of municipal employees or if it cannot finance public services, she said.

The loan is to pay for basic services such as public transport, waste collection and public works.

Even if the metropolitan leadership does not request the loan, it may be extended anyway, "so nobody is left unpaid", she said.

In return for the loan the government would expect the city to make its accounts transparent and present regular financial reports, the Fidesz representative said, adding that the scheme would make it impossible for municipal leaders to "steal" or "be secretive" about the city's finances.

Klara Dobrev, head of the opposition Democratic Coalition (DK), expressed her party's "full rejection" of the "Budapest slave law". She added that DK would not even discuss the bill now before parliament.

Dobrev insisted that the government had been keeping Budapest "under siege" for the past six years for "Budapest's preference of freedom over Fidesz rule". She said the government had first stripped the city of "tens of billions of forints" then "graciously offered a loan ... to be taken out from the oligarchs of Viktor Orban".

Accepting the government's conditions would terminate Budapest's independence and subject the city to government guardianship, she added.

Official: Budapest on verge of bankruptcy due to mistakes of left-wing city administration

Budapest is in a difficult financial situation and on the verge of bankruptcy "due to the mistakes of the left-wing city administration", an official of the Prime Minister's Office told parliament on Wednesday during the general debate on the government's bill on granting a loan to prevent the bankruptcy of the capital's municipality.
 

State secretary Miklos Panyi said that the left-wing city administration was managing the city's finances "in a reckless and irresponsible manner", having used up the capital's previous reserves of 200 billion forints (EUR 530m) and leaving Budapest in debt.

He added that the bill addressed this situation with a loan scheme that would ensure the smooth functioning of the city and the payment of all salaries of those working in the capital, without undermining the authority of the local government.

Budapest official: Capital could end year with HUF 33 bn deficit

The Budapest municipal council's account could be as much as 33 billion forints (EUR 85.9m) in the red on Dec 31, the city administration's director told a press event.

Based on the latest liquidity table, Budapest's account will have a 33 billion forint deficit on Dec 31 if "three more things happen" in addition to the most recent withdrawal of a solidarity contribution from the city's account, Ambrus Kiss said.

He said this was "a problem" because Budapest's current account loan expires at the end of the year, and if the capital does not pay it back, the next credit line cannot be opened. Also, the city would be in violation of the stability law, according to which a local council cannot carry over an operating loan to the following year, he explained.

Kiss said the 33 billion forint deficit would be made up of the sum withdrawn from the city's account last month, a sum that could be withdrawn by Dec 19 as well as the 8.8 billion forints owed by the government for the city's procurement of trolley buses, and 12 billion forints for public transport funding the city was entitled to under its agreement with the government.

He said the city may not receive the latter two sums this year, noting, however, that according to the government's announcement on Wednesday, Budapest will receive the money for the trolley bus procurement.

Kiss said that at the end of the year, Budapest's account balance would be "between 0 and a 33 billion forint deficit", adding it was "terrible not knowing how we'll end the year, but these factors are outside our control".

Karacsony: Govt's Budapest bill 'a political cudgel, not a solution'

The government's proposed law on Budapest's finances is a "political cudgel" that fails to address any real issues, Gergely Karacsony, the city's mayor, told a press briefing after a Hungarian Municipalities Association (MOSZ) meeting on Tuesday.

"The bill claims to enable city borrowing, but this is something we can do already, transparently, from commercial banks," he said. "The only 'innovation' is threatening the mayor with prison for resisting the city's financial gouging."

The mayor called for such "hostile proposals to be abandoned for good" in favour of constructive dialogue.

Asked what happens if parliament passed the bill, Karacsony said: "They'll open a door we won't walk through."

Meanwhile, Gyorgy Gemesi, the mayor of Godollo and MOSZ's co-chairman, warned that nearly 30 towns now faced a budgetary emergency, proving the crisis extended far beyond Budapest.

Karacsony, who is the association's other co-chairman, said MOSZ will draft comprehensive reform proposals for the next government, "regardless of the election results". The package to be sent to Tibor Navracsics, the regional development minister, will demand clear, transparent funding tied to defined municipal responsibilities and sustainable, inflation-proof wages for public employees, he added.

Tamas Wittinghoff, the mayor of Budaors and a MOSZ board member, said the entire system "must be rebuilt to restore local governance", and he stressed the need to safeguard municipalities' operations.

Source: MTI – Hungary’s national news agency since 1881. While MTI articles are usually factual, some may contain political bias, and readers should be aware that such content does not reflect the position of XpatLoop, which is neutral and independent.

Since the goal of XpatLoop is to keep readers well briefed, right across the spectrum of opinions, MTI items are shared to ensure readers are aware of all narratives within the local media.

XpatLoop believes in empowering readers to form their own views through complete and comprehensive coverage. To facilitate this XpatLoop has a balanced range of news partners, as you can see when you surf around XpatLoop.com

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