Budgeting in Hungary during the Democratic Transition

This article examines budgeting in Hungary since 1989, beginning with an analysis of the comparative budgeting literature to identify an appropriate theoretical framework for the study. It explores budget definition and measurement problems, debt and economic conditions, external actors and constraints on the budget, budget institutions, and the impact of parliament on the budget, concluding with an assessment of the problems and prospects for Hungary’s budget.

Fiscal Risks and The Quality of Fiscal Adjustment in Hungary

A discussion on fiscal risk with Hungary as a case study. The paper provides an overview of the different aspects of analyzing and managing fiscal risk. The study explores the challenges the government has in transitioning to an open, market-driven economy and how it has taken on new risks to stimulate development, rebuild the country’s deteriorated infrastructure, stabilize financial institutions, and encourage capital inflows.

Hungary

Transparency (Open Budget Index) 49/100 

The Government of Hungary provides the public with limited budget information.

Public Participation 31/100 

Hungary is weak in providing the public with opportunities to engage in the budget process.

Budget Oversight

By legislature 58/100 

Budget oversight by the legislature in Hungary is limited.

By auditor 83/100 

Budget oversight by the supreme audit institution in Hungary is adequate.

Recommendations

Improving Transparency

Hungary should prioritize the following actions to improve budget transparency:

  • Produce and publish a Pre-Budget Statement, a Citizens Budget, and a Mid-Year Review.
  • Increase the comprehensiveness of the Executive’s Budget Proposal by, for example, presenting more data on debt, including its composition and interest rates.
  • Increase the comprehensiveness of the Year-End Report by presenting, for example, a detailed narrative discussion explaining differences between planned versus actual outcomes.
  • Publish the tables and data in budget documents in a machine-readable format.
Improving Participation

Hungary should prioritize the following actions to improve budget participation:

  • Establish credible and effective mechanisms (i.e., public hearings, surveys, focus groups) for capturing a range of public perspectives on budget matters.
  • Hold legislative hearings on the budgets of specific ministries, departments, and agencies at which testimony from the public is heard.
  • Establish formal mechanisms for the public to participate in audit investigations.
Improving Oversight

Hungary should prioritize the following actions to strengthen budget oversight:

  • Ensure the legislature holds a pre-budget debate and the outcome is reflected in the Enacted Budget.
  • Establish regular consultations on budget matters between the executive and the legislature.