HUF 600 billion in municipal debt consolidation on the agenda

Easing the burden on municipalities was again on the agenda of Tuesday’s cabinet meeting. It was decided that HUF 600 billion of local council debt, including 60 per cent of the capital’s debt, will be taken over by the state.

The debt consolidation of towns with less than five thousand inhabitants has been completed, now the situation of those with larger population needs to be settled.

The Prime Minister specified that 40 per cent of debt would be consolidated in the case of municipalities that are in a good financial state, and 70 per cent in the case of the most disadvantaged ones, making a total of HUF 600 billion.

In the capital, 60 per cent of the total debt will be taken over; however, some details are yet to be discussed, and so, according to Prime Minister Viktor Orbán, the Cabinet is likely to decide on a large-scale “cooperation package” on 8 March. He added that some questions still remain open in the case of about a dozen settlements.

This is the first time that the central government has taken over such a volume of debt from municipalities. At the same time, Mr. Orbán stressed that local governments have agreed to keep to much stricter financial regulations in order to avoid future debts.

Finally, the Prime Minister also reinforced the fact that the Government is aiming to achieve economic growth while decreasing public debt.

(Prime Minister’s Office)