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He added that the whole country could see drawbacks of the “anti-Budapest government policies”.
According to the mayor, the downgrade was an “obvious” development after the money markets had expected “a sensible financial deal” between the government and the capital but “despite all signals the government proved incapable of such an agreement: they continued tapping Budapest’s accounts and failed to meet their legal obligations towards the capital.”
“Moody’s decision has been a consequence of that governmental attitude,” Karácsony said. The mayor suggested that the ratings agency saw increased risk in “the government’s delaying payments to the city already included in the metropolitan budget”.
Karácsony slammed the government for the cabinet’s “reluctance to negotiate” over a “twentyfold increase” in recent years in the city’s tax payments to the central budget. He said the city’s solidarity tax had been raised by 31% in 2024, to HUF 76 billion, while it was expected to reach HUF 89 bln in 2025, some 21% of the total municipal revenues.
He noted that the tax the city was obliged to pay would exceed subsidies from the central budget, while “prolonged legal disputes … increase instability of the system, jeopardise the budget and the balance of financial assets.”
Late on Monday, Moody’s said it downgraded Budapest’s baseline credit assessment (BCA) to ba1 from baa3 and long-term foreign and domestic issuer ratings to Ba1 from Baa3, putting them below investment grade.
The agency said the action follows the disclosure of Budapest’s liquidity position, highlighting concerns about the city’s capacity to repay all of its obligations as required by December 31, 2025.
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