The State Audit Office (ÁSZ) has warned that without effective measures, the Budapest municipality could become insolvent in the fourth quarter of 2025, jeopardizing the provision of public services.
According to the report on the city’s budgetary and financial situation, the municipality has been unable to resolve its difficulties on its own and requested government support. Talks with the cabinet began in June 2025.
The report highlights that the city’s financial problems, which worsened from 2020, were driven by the pandemic, rising energy prices, and inflation, compounded by growing budgetary obligations. The audit noted that liquidity issues escalated in 2025 to the point that nearly the entire increased overdraft facility may have to be used to cover payments.
Between 2019 and 2024, Budapest ran up a deficit of HUF 193.4 billion, further strained by a solidarity contribution of HUF 45.7 billion that was paid but not recorded among expenditures. The city’s savings, totaling HUF 214.2 billion at the end of 2019, were nearly exhausted by 2022. Since 2023, liquidity gaps have been managed by deferring payments, reallocating earmarked funds, and drawing on municipal companies.
ÁSZ criticized the municipality for relying only on temporary measures in 2024–2025, without implementing structural reforms to ensure long-term balance or more efficient service delivery. It also flagged the planned Rákosrendező real estate project as a major financial risk.
The solidarity contribution, which rose from HUF 10 billion in 2019 to HUF 69.5 billion in 2024, totaled HUF 230.2 billion over six years. The audit also found that parts of the 2025 budget lacked sound financial foundations, with some expenditures unfunded.
The Curia earlier ruled that the amount of solidarity contribution included in the 2025 budget was unlawful, forcing the assembly to amend the document. However, ÁSZ said the revised plan still relied on revenue assumptions not backed by a binding court ruling, leaving the city’s budgetary position precarious.
