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Govt go-ahead to MÁV, BKV debt assumption, PPP buyout cap

Hungary will assume up to HUF 300 billion in debt from state-owned railway company MÁV and up to HUF 78 billion from Budapest public transport company BKV, under a government decree published on Thursday.

In the same decree, the government limits spending to end public-private partnerships (PPPs) to HUF 200 billion.

The decree mandates the national development minister and the national economy minister to involve the Government Debt Management Agency (ÁKK) in talks on the legal and financial conditions for taking over the debt with the affected parties. The decree also notes the takeover will mean an amendment to the 2011 budget.

The decree gives the national development minister a mandate to draw up a proposal for a cost-efficient restructuring of MÁV and BKV as well as changes to fares and discounts that will ensure the companies do not continue to run up new debts. The proposal must be submitted to the government by September 30.

The national development minister must also present by September 30 a proposal to the government on replacing PPPs that addresses, when possible, specific investments.

The government outlined the plans to take over the debt of MÁV and BKV as well as the buy-out of PPPs in the Széll Kálmán Plan, a restructuring program presented in March.