In this article you will find information about debt consolidation credit assistance, debt credit services, Debt help self

Debt consolidation credit assistance

As a result of the measures introduced on the authorisation of loans pursuant to Act CXCIV of 2011 on the Economic Stability of Hungary, the deficit of the local government subsystem decreased significantly. In accord ance with Article 34(5) of the Fundamental Law, which entered into force in 2012, a sepa rate law may make the commitments of local governments subject to certain conditions or to the approval of the government in order to maintain budgetary equilibrium. On the basis of this authorisation, the Stability Act provided that the payment obligations of local governments resulting from transactions that create a debt in the current year may not ex ceed 50 per cent of their own revenues in any year until expiry. This regulation was meant to ensure that the local governments do not become insolvent due to their debt service obligations. Concurrently with this, the ban on taking out additional loans by local gov ernments that have already exceeded this limit created an opportunity for reducing exposure to debt. In addition, any transaction with a development or operational purpose that cre ates debt for a local government was made subject to the approval of the government.

Debt credit services

Certain credit transactionswere possible without the approval of the government. The loans taken out for advancing EU develop ment grants, that is, for providing the own contribution in these tenders were removed from the loans requiring approval, since these loans were connected to investments sup ported by EU funds and the coverage of loans was the development grant provided by the European Union. Loans taken out for opera tional purposes with durations of less than a year are also not subject to approval, as they do not have an effect on the yearend status of government debt. On the other hand, their authorisation would cause too much delay, weakening the liquidity of local governments.

Debt help self

The transactions relatedto restructuring loans taken out for the conclusion of creditor agreements during the debt settlement proce dure may also be carried out without the ap proval of the government. In addition, trans actions below HUF 10 million, HUF 100 million in the case of the capital and towns with county rank, which create a debt are also not subject to government approval.

Theprocedure for the contribution to the commitments of local governments is regu lated by Government Decree No. 353/2011 (XII. 30.) on the detailed rules on the con tribution to transactions creating a debt. This regulation also defines what own revenues can be used as a collateral for the transactions cre ating a debt.