Hódmezővásárhely was the first city where the coordination process about taking over local government debt by the state began.

On Thursday Minister for National Economy György Matolcsy and Minister of State for the Prime Minister’s Office János Lázár met with Mayor István Almási and other city leaders. At the press conference prior to the negotiations the Minister stated: the objective of the Government has been to free the great majority of local governments from debt trap.

As situation differs from town to town, debt takeover is preceded by co-ordination. The amount of loans taken out formerly by settlements with a population of less than 5000 people for which the Government undertakes full debt assumption, 1750 in all, totals 95-100bn HUF – the Minister said.

More than 200 towns with more than 5000 inhabitants need unique, case-by-case solutions and finding these may take 4-6 months. The state will assume the 40-70 percent of debt of these towns, depending on their revenues, and this amount may total almost 520bn HUF.

At the negotiations the future plans of the town will also be discussed, and what kinds of developments are projected for the 2014-2020 EU fiscal period, the Minister for National Economy added.

As Minister of State Lázár pointed out, this Government decision will impact 8.8 million people. In the history of towns the significance of this measure can only be compared to the establishment of the current local government system in the 1990s.

The politician also announced: on Monday the Prime Minister will request MPs directly elected by their constituencies to visit the relevant towns of less than 5000 inhabitants accompanied by experts from the Ministry of Interior Affairs and commence negotiations as the Government aims to consolidate local government debt already this year.

On behalf of the Government towns with 5-50 thousand inhabitants will be visited by Minister of Interior Sándor Pintér and Minister of State András Tállai. Until 20 December ministers will discuss the structure and size of local government debt with each city with county rights, the Minister of State for the Prime Minister’s Office stressed.

At meetings with the Municipality of Budapest and the local governments of its districts the Government will be represented by Minister of State János Fónagy, he added.

As Minister of State Lázár said, Hódmezővásárhely spent 42bn HUF on developments in the past ten years and took out loans of only 12bn HUF. The amount of total local government debt is approximately 20bn HUF, of which 50-60 percent may be taken over by the Government.

(Ministry for National Economy)