The State Audit Office of Hungary (ÁSZ) has warned that without corrective measures, the Municipality of Budapest could become insolvent in the fourth quarter of 2025, threatening its ability to provide essential public services. The findings come from an audit of the capital’s budget and financial management, released this week.
The report states that the municipality has been unable to resolve its financial difficulties independently and requested government support, with negotiations beginning in June 2025. The city’s fiscal problems stem from several factors, including the economic impact of the COVID-19 pandemic, soaring energy prices, rising inflation, and increased mandatory contributions to the national budget.
According to the analysis, liquidity problems have deepened significantly in 2025, making it increasingly difficult to cover payments. By August, the municipality is expected to nearly exhaust its expanded overdraft facility to meet its obligations. Between 2019 and 2024, Budapest accumulated a budget deficit of 193.4 billion forints, further burdened by 45.7 billion forints in solidarity contributions that were paid but not recorded as expenditures.
The city’s financial reserves, totalling 214.2 billion forints at the end of 2019, were almost entirely depleted by the end of 2022. Since then, liquidity challenges have been managed mainly through delaying certain expenses, reallocating earmarked funds, and reclaiming money from municipal companies.
ÁSZ noted that while the municipality introduced temporary measures in 2024–2025 to maintain solvency, it failed to adopt substantial reforms to make service delivery more efficient or to secure long-term fiscal balance. Additional risks include the planned purchase and development of the Rákosrendező property.
The audit also highlighted inconsistencies in the city’s 2025 budget, which did not fully ensure funding sources for planned expenditures, raising doubts about its feasibility. In addition, the solidarity contribution has surged sharply, climbing from 10 billion forints in 2019 to 69.5 billion in 2024, amounting to 230.2 billion over six years.
Further concerns were raised after the Curia ruled that the solidarity contribution projected in the 2025 budget violated other legal provisions. Although the City Assembly revised the budget accordingly in June, ÁSZ concluded that the planned revenues covering the contribution remained economically unsubstantiated, as no binding court ruling guaranteed reimbursement.
The report ultimately determined that Budapest’s measures so far have been insufficient to restore budgetary balance or ensure more cost-efficient service delivery, leaving the city’s financial stability in jeopardy.
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