Encouraging sub-national government efficiency in Hungary

Abstract

Hungarian sub-national governments are facing difficult challenges. Many of the cost-cutting structural reforms to public services being initiated by central government involve the municipal and county governments through their responsibilities in providing services. In addition, these governments face ongoing investment challenges in raising the quality of local infrastructures to address social and economic issues. TThere are wide regional disparities in GDP per capita across Hungary, reflecting an uneven pace of economic development. Local governments in poorer areas in particular need to be successful in accessing EU-funds aimed at narrowing gaps in development through infrastructure investment. This paper looks at how meeting these challenges can be helped by changes to budgeting systems, financing arrangements and spending responsibilities in the municipal and county governments.