Budapest transport operator forced to take out huge emergency loan as city cash reserves run dry

Budapest’s public transport organiser, the Budapest Transport Centre (BKK), will take out a HUF 45 billion (around EUR 115 million) short-term loan after the Hungarian capital’s cash reserves dropped to critically low levels at the start of the week.

The decision was approved by Mayor Gergely Karácsony between two sessions of the city assembly in order to ensure the continued financing of Budapest’s transport services.

According to Népszava, the loan will be split between two banks. K&H Bank will provide HUF 30 billion, while MBH Bank will supply the remaining HUF 15 billion.

City officials say the measure is temporary and necessary to maintain liquidity until expected tax revenues arrive later in March.

Borrowing to maintain day-to-day operations

The loan is described as a short-term working capital facility, designed to ensure that BKK can meet its operational obligations throughout the year.

Budapest City Hall requested offers from several banks earlier this year, assessing proposals based on interest margins and additional costs linked to unused credit lines. Officials concluded that the K&H and MBH offers were the most favourable.

Importantly, the loan does not require approval from the Hungarian government, because it is scheduled to be repaid within the same fiscal year.

City Hall also emphasised that no municipal property has been pledged as collateral. Instead, the loan is backed by funding the city already provides to BKK through its public service contract.