Govt submits bill on general government to parliament

The government has submitted to Parliament a bill that will establish a new General Government Act, if approved.

The current General Government Act was drawn up in 1992 and is no longer transparent, according to the reasoning for the bill. Hungary’s new Constitution also contains rules that require a new structure for the law on the general government, it adds.

The bill separates the general government into subsystems for the central government and local government. It also gives "separate state funds" and social security funds, at present handled as separate subsystems, their own budget chapters. Assets of the Hungarian Development Bank (MFB) get their own budget chapter too.

The bill does not include "fiscal responsibility" rules approved in the current General Government Act in 2008. The bill’s authors reason that the rules may have been well-founded in theory but failed in practice. They also noted that Hungary’s new Constitution outlines a steady reduction of state debt to 50% of GDP, rather than the vague reduction in state debt in the mid-term mandated in the legislation on fiscal responsibility.

The bill does not contain any rules on public private partnerships, as Hungary is phasing these out. Nor does it contain the current rule that a debt may be taken over only by accounting it as a budget appropriation because the bill’s authors say it is obscure.

The bill does not contain a rule prohibiting public procurements in the absence of sufficient funding. Instead, it contains a general rule prohibiting taking on obligations that are not backed by an allocation.

The bill establishes the act as a framework. Details are to be set by decree.