Debt of Hungarian public institutions swells enormously as a result of the payment freeze

In October, the overdue debt shot up by HUF 42.1 billion, a one-month increase in debt previously unheard of, just like the complete stop on all payments in the budgetary institutions, regardless of whether the state has used the service in question or not.

At the beginning of the year, the overdue debt of public institutions was HUF 25 billion, by July it had almost doubled to HUF 47 billion, and in the following three months it doubled again, meaning that the financial situation of public institutions deteriorated.

An emerging new phenomenon is a circular debt in budget institutions, as some of them no longer even pay each other.

Public institutions are most likely to default on payments to suppliers of goods (HUF 75 billion), followed by other unpaid invoices worth HUF 24 billion (such as contract work or the purchase of services), and only in third place is the overhead debt with HUF 11 billion.

Two-thirds of the overdue debts have accumulated in government agencies, the police, and the Ministry of the Interior.

The debt of government agencies jumped to HUF 11.7 billion, an increase of nearly five billion forints in a single month, clearly the result of the government's payment freeze.

Non-payment has been on the rise in recent months: according to a report by the Hungarian State Treasury, 489 out of 582 budget institutions reported overdue debts, i.e. almost 85% of public institutions, suggesting that there are widespread payment problems in the budget - it is no coincidence that the government ordered a payment freeze in October, although it did nothing to improve the situation. 

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