Government “Committed” to Maintaining the Capital’s Functionality in Case of Insolvency

At a press conference, Minister of the Prime Minister’s Office Gergely Gulyás provided information about the government’s latest decisions from the previous day concerning the capital’s insolvency, and economic issues.

Gergely Gulyás told journalists that the government had discussed the situation in Budapest at its meeting on Wednesday. “We regret that six years of left-liberal city administration have led to a situation where the mayor of Budapest is talking about the city’s insolvency and bankruptcy,” he said.

He added that the government wanted to help Budapest and provide clarity. The city council is expected to officially declare insolvency, whereupon the government will intervene and ensure the city’s functionality in this case, Minister Gulyás explained.

The government remains committed to ensuring Budapest’s viability as soon as the Capital City Council officially declares insolvency,”

he stressed.

Budapest must not become dysfunctional, because the functioning of the country’s capital is important for everyone, he emphasized, adding that the government believes it is a bipartisan goal that Budapest’s possible insolvency must not under any circumstances lead to the city’s dysfunction.

Fact

As Hungary Today has previously written, a report by the State Audit Office on the budgetary and financial status of the capital’s local government found that the liberal opposition-dominated Budapest city administration could become insolvent in the fourth quarter of 2025. According to the analysis, the city’s liquidity situation has deteriorated since 2022, and by August 2025, even the increased overdraft credit line is expected to be almost completely used up to cover payments. Mayor Gergely Karácsony asked for the government’s assistance in a letter addressed to the Prime Minister on Tuesday.

Minister Gulyás also announced that the proposal for a 14th monthly pension payment is expected to be passed by parliament next week, and that the corresponding amendment will be discussed in the National Council. Furthermore, pensions will be increased by 3.6 percent next year, which is expected to be above the inflation rate.

Gergely Gulyás. Photo: MTI/Balogh Zoltán

The government also reviewed the results of the Otthon Start (“Home Start”) loan program. The number of applicants for the aforementioned loan with a fixed interest rate of 3% is approaching the 10,000 mark. “In Hungary, four out of ten home purchases are related to the ”Otthon start” program, the Minister said, adding:

Next year, the housing market will be expanded by several tens of thousands of properties, as the program will also be extended to include plots of land with enclosed gardens.”

Recently, the rise in real estate prices has slowed down, and in Budapest and the cities with county rights, it has even come to a standstill, he noted. The program is also having a positive effect on the construction industry, and rents are falling nationwide, Gulyás emphasized.

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