Budapest could become insolvent as early as next week, Mayor Gergely Karácsony warned on Tuesday, issuing a stark assessment of the capital’s finances. While there is, he said, political will to avert bankruptcy, no viable solution has yet emerged.
Budapest facing serious financial problems
Speaking at a municipal conference organised by the Republikon Institute, Mr Karácsony noted that the capital had been granted a 60-day reprieve on paying the so-called solidarity contribution, a deadline which expires next week. No decision has been taken either on an extension or on alternative measures, leaving Budapest’s financial position uncertain.
The mayor said the city had been “bleeding from a thousand wounds” in recent years, as significant debts accumulated within municipal companies and across infrastructure. He stressed, however, that the city leadership had resisted addressing the crisis through cuts to public services.
Mr Karácsony welcomed proposals in the programme of the Tisza Party, including plans for a dedicated Budapest law and a greater share of state tax revenues for local authorities. In the longer term, he argued, a portion of personal income tax and vehicle tax revenues should be returned to municipalities to ensure sustainable financing.
Solidarity contribution
Krisztina Baranyi, mayor of Ferencváros, said local authorities were primarily seeking genuine partnership from any future government. In her view, reducing the solidarity contribution would offer only temporary relief; what is required instead is a comprehensive overhaul of the municipal framework.
Péter Niedermüller, mayor of Erzsébetváros, argued that Budapest’s predicament was not merely financial but concerned the city’s very capacity to function. He called for a fairer and more transparent system governing the solidarity contribution.
László Böröcz, the Fidesz mayor of District I, urged a reassessment of competences between the capital and its districts. Successful municipalities, he said, should be incentivised rather than penalised, while more disciplined financial management could help boost revenues.
A central message of the conference was that, without far-reaching reform of the municipal system, financial crises such as that facing Budapest are likely to recur.
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