Parliament adopted a “rescue” law for Budapest. The mayor is facing arrest

The Hungarian Parliament adopted a law on Wednesday that could force Budapest, which is struggling with financial problems, to take out a loan from the central government and – if the conditions imposed by the state are not met – lead to the arrest of the opposition mayor of the capital.

Gergely Karacsony, mayor of the Hungarian capital and critic of Prime Minister Viktor Orban, warned a few weeks ago that the city was facing insolvency. The Budapest authorities blame the city's financial problems on the central government, which – as they note – has raised taxes and withheld funds for the capital. Orban's office claims that the mayor's “irresponsible spending” led to the city's problems.

The law on “granting a loan to prevent the bankruptcy of Budapest” was adopted by a majority of 136 deputies in the 199-seat parliament. The document was adopted in an accelerated manner during an extraordinary session.

According to its provisions, Budapest can apply for a loan from the state-owned Hungarian Development Bank, but taking out a loan may also be forced by an office supervised by the central government. The government could dictate the terms of such a loan, including the interest rate, repayment period and assets securing it.

The act also obliges the mayor to prepare financial documents and implement reforms within six months, under penalty of two years in prison.

The conflict between the capital authorities and the central authorities has been going on for years. After Karacsony's election in 2019, the government increased the contributions that Budapest must pay to the state budget almost nine times. The step was justified by the need to redistribute funds from richer cities to poorer communes. The Budapest authorities filed several lawsuits in this case, claiming that the decisions were unconstitutional.

Jakub Bawołek from Budapest (PAP)

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