Government Spokesperson András Giró-Szász declared at a joint press conference held with Minister of Interior Affairs Sándor Pintér that the local governments may begin a new life following the Government's debt consolidation program.
The Government Spokesperson said that until the end of last year, the Government had settled the debts of municipalities with populations of below 5000 and this week it decided to take over 40-70 percent of the debts of municipalities with populations of more than 5000, so they may start building the future on a new foundation.
Minister of Interior Affairs Sándor Pintér declared that a total of HUF 1247 billion in debt had accumulated by the end of 2010, in addition to HUF 136 billion in expired invoices.
The Minister pointed out that a significant amount of debt had accumulated partly because the 1990 law on local governments had after a while been unable to keep pace with social changes, and partly because plenty of municipalities did not take into account their own financial resources. He added that despite receiving HUF 189 billion in funding and additional resources from the Government in 2011, the total debt of local authorities did not decrease significantly, which led the Government to decide on debt consolidation.
Sándor Pintér expressed that the Government is about to take over 60 percent of the capital’s municipal debt, however, he added that the Prime Minister and the Mayor of Budapest would hold separate negotiations on the capital’s economic status.
The Minister indicated that 4 local governments are currently under debt settlement procedures, and until these are concluded there will be no negotiations regarding the transfer of debt. He also remarked that 57 local governments were not in debt and so required no consolidation, adding that the Government had found 1160 local governments that had handled their finances in a suitable manner, and that in his opinion these municipalities may expect recognition from the Government at a later date.
(Prime Minister’s Office)
