The audit conducted by the State Audit Office of Hungary (SAO) to assess the budgetary and financial situation of the Municipality of Budapest and the measures taken and planned to maintain financial balance and solvency has been completed. In its report, SAO concluded that the measures taken by the Municipality of Budapest to improve its financial situation were insufficient to restore budgetary balance. According to SAO, the liquidity difficulties of the Municipality of Budapest worsened to such an extent in 2025 that, in the absence of the necessary measures, the Municipality could become insolvent in the fourth quarter of 2025, which could jeopardize the performance of public tasks.
According to the SAO report, the liquidity situation of the Municipality of Budapest gradually deteriorated from 2022. At the end of 2019, it had total savings of HUF 214.2 billion (cash and cash equivalents, investment and trading securities), which it had almost completely used up by the end of 2022. From 2023 the Municipality of Budapest addressed its liquidity problems by rescheduling certain expenditures to the following year, reallocating amounts set aside for other purposes, and recovering amounts from its business companies.
Although the solvency of the Municipality of Budapest was influenced by several factors, including a number of external circumstances, the SAO considers it an important factor that measures were lacking that would have been necessary and justified in order to make the system of public service provision more efficient and achieve a more balanced budgetary situation in the longer term. In contrast, in order to maintain its solvency in 2024-2025, the Municipality of Budapest implemented mainly measures aimed at temporarily addressing liquidity problems. According to the report, the Municipality of Budapest did not take any substantive measures that would have served to perform its public tasks more efficiently at the same level of service but at a lower cost. According to the SAO, the payment of the purchase price for the Rákosrendező properties and the implementation of the planned project pose further financial risks for the Municipality of Budapest.
The SAO also found that the Municipality of Budapest did not plan for all of its budget expenditures to be covered by reliable sources in its 2025 budget, making it risky whether the budget can be implemented.
The SAO regularly audits the financial management of the Municipality of Budapest, focusing on specific areas. In its February 2024 report, the SAO already drew attention to the risks of the Municipality of Budapest’s financial management and its long-term unsustainability. In its analysis published in November of the same year, it predicted that financial difficulties could worsen in 2025. In its May 2025 analysis, it indicated that, in the absence of further measures, the Municipality of Budapest would not be able to maintain its solvency, which could also jeopardize the performance of its public tasks.
In its latest report, the SAO has made further recommendations to the mayor and the chief clerk.
The full report in Hungarian is available here.