Panic: Budapest could become insolvent as early as this summer

According to Budapest’s municipal authorities, the capital could face a significant budget deficit of HUF tens of billions this summer. This could even put the capital in danger of becoming insolvent. According to information, the Treasury collected HUF 4 billion (EUR 10.4 million) from the capital’s bank account on Tuesday.

No savings left, no funds from the government for Budapest

According to Mandiner, the Ministry of Finance earlier said that Gergely Karácsony inherited HUF 214 billion (EUR 559 million) in savings from his predecessor István Tarlós when he took office. In recent weeks, the mayor has said that the city had used up its financial reserves because the government had taken away significant funds from them. That they had gone to court over the matter.

Mandiner has now obtained a letter that Deputy Mayor Ambrus Kiss wrote to the Finance Ministry earlier in March. In the letter, the deputy mayor admitted that

the municipality could become insolvent as early as this summer.

Worsening financial situation, HUF 4 billion collected

In the letter, he wrote that the “economic crisis, the pandemic caused by Covid-19, the increase in energy prices due to Russian aggression and the increase in government cutbacks” had led to the worsening financial situation. He said that the city’s average monthly operating costs were HUF 25.7 billion (EUR 67.1 million), half of which was spent on public transport.

According to information available to Index, the Treasury collected HUF 4 billion (EUR 10.44 million) in the capital’s bank account on Tuesday.

The letter by Ambrus Kiss was accompanied by a table showing that, according to the city administration’s calculations, Budapest could have a significant budget deficit by the summer. It was estimated at the time that the capital could be in deficit by HUF 60 billion (EUR 156.7 million) in July and HUF 86 billion (EUR 224.6 million) in August.