Budapest mayor Karácsony warns: Draining the capital could lead to state bankruptcy

By unlawful withdrawals from Budapest’s accounts, the government is putting not only municipal public services at risk but also risking insolvency of the state budget, the city’s mayor said on Saturday.

The municipality on Tuesday submitted a request for immediate judicial protection over a dispute concerning the solidarity contribution City Hall is required to pay into the central budget.

“Those annually increasing withdrawals from Budapest and every Hungarian settlement put the country’s entire economy at risk,” Gergely Karácsony said on social media. “The aim is to patch up holes in the central budget, but because of reckless spending, graft and the thirst of oligarchs for money, the central budget is getting into worse and worse shape,” the mayor said.

If the municipality is not capable of financing public services, international credit rating agencies will downgrade the capital, which will lead to their downgrading the whole country, he added.

“Bleeding out Budapest will lead to Hungary’s bankruptcy”

As a result, Karácsony said that “the interest burden of the indebted state could skyrocket, which could seriously affect the forint exchange rate, the stock markets and the yield on government bonds, and could accelerate capital outflow from Hungary.”

“Bleeding out Budapest will ultimately lead to state bankruptcy.”