Central government to take over county council institutions from 2012

Hungary's central government will take over county government institutions from January 1, 2012 under an agreement signed on Monday.

The central government will also take over county governments' HUF 180bn in accumulated debts, Prime Minister Viktor Orbán told journalists. Talks on the possible transfer of the debt will start with banks, he added.

The agreement is the result of more than six months of talks with county governments that "are up to their necks in debt", he said.

It is hoped the unified step will create an advantage for the counties, Orbán said. The government can achieve better conditions at talks to solve the problem of the county governments' unmanageable debts than the 19 counties can on their own, he explained.

Orbán stressed that the government would be cautious in the procedure, taking into consideration the point of view of banks. The Hungarian banking system already has had much to bear, and these banks are necessary because loans are needed to finance the economy, he added.

Bills implementing the agreement signed with the county governments will be submitted to Parliament in the autumn. The transfer of health and educational institutions will happen under regulations for the specific sectors.

Orbán said the measure would correct a mistake made two decades earlier, during the change of system. There is every hope the step will prevent the further accumulation of debt, he added.

The agreement will give more security to employees of county government institutions as well as the people they serve, Orbán said.

Lajos Szűcs, chairman of the National Association of County Governments said the agreement was a necessary one, but the details still needed to be negotiated.

Hungary's local governments (including county governments) have combined debt of about HUF 1,200bn, data from the National Bank of Hungary show.