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Fiscally responsible local councils could get preferences, says dep PM

Local councils that handled their finances responsibly and did not fall into debt can expect to get preferences, Deputy Prime Minister Zsolt Semjén said at a press conference in Szekszard (SW Hungary) on Thursday.

Some of Hungary's indebted local councils handled their finances irresponsibly, drawing on credit to pay for operating costs, while others borrowed to cover the co-financing for investments supported by grant money, Semjén said.

It could turn out that the financing of some local councils was so irresponsible that there could be criminal consequences, he added, noting that the State Audit Office was in charge of uncovering such matters. Hungary's government on Wednesday approved a plan for the state to take over more than HUF 600 billion in local council debt.

It will take over all of the debt of local councils in communities with fewer than 5,000 residents by the end of this year. For bigger communities, the takeover – to be worked out by the middle of 2013 – will be tied to the number of residents as well as local tax revenue per resident.