State budgetary institution debt at record levels

October 23, 2013


The Hungarian government has resorted to borrowing USD 225 million from domestic suppliers interest free for an indeterminate period of time.  If current trends continue, state budgetary institutions, including hospitals and schools, will likely owe more than HUF 100 billion (USD 465 million) by the end of the year according to the latest figures issued by the State Treasury office.

The main reason for this is that the State Treasury office has not been paying its bills on time.

When the current Fidesz-KDNP government came to power in May 2010 state budgetary institutions owed a total of HUF 21.5 billion (USD 100 million).  Over the next 36 months this amount quadrupled to HUF 87.1 billion (USD 405 million).  As of the end of September of this year total arrears came to HUF 97.7 billion (USD 454 million),  HUF 48.5 billion (USD 225 million) of which was more than 60 days overdue.

Of the HUF 97.7 billion owed at the end of September, HUF 12.0 billion (USD 56 million) was owed to the national government in the form of government loans that have yet to be repaid. A total of HUF 85.1 billion (USD 396 million) was owed to suppliers and contractors. Public institutions under the Ministry of Human Resources owed a total of HUF 77.8 billion (USD 362 million), of which schools, colleges and universities owed HUF 19 billion (USD 88 million) and hospitals and other public health facilities owed HUF 65.6 billion (USD 305 million).

Hospital arrears alone increased ten percent between June and September, forcing drug wholesaler Hungaropharma to terminate all contracts with hospitals in July due to non-payment.

In September the president of the Hungarian Association of Hygienic Technicians (MATISZ), Zoltan Paar announced that sterile conditions at hospitals were threatened by the fact that HUF 2 billion (USD 9 million) worth of cleaning invoices had not been paid.

Hospital arrears and the defunding of the public health system in general has resulted in temporary shortages in essential hospital supplies, including rubber gloves, according to former surgeon general, Ferenc Falusi.

Most of those owed money are small and medium-sized Hungarian owned companies whose employees can ill afford to go months without getting paid.  Shame on the State Treasury for diverting this money to the construction of football stadiums and other projects of doubtful social utility!

Referenced in this article:

“Megtört a több hónapos trend – tízmilliárdokat nem fizet ki az állam”. 22 October 2013

 “State hospitals in critical condition”. Budapest Times. 21 September. 2013

“Hospital deaths double as bills unpaid”.  Budapest Times. 1 October 2013