The Budget Council

Budget Council President

Budget Council President Árpád Kovács.

The Budget Council (Költségvetési Tanács) is an independent body that monitors the process of formulating and implementing annual government budgets in Hungary. The country’s Fundamental Law provides the three-member Budget Council with the authority to sanction proposed government budgets with its “prior consent” before their submission to the National Assembly. The European Union has formally criticized the Budget Council’s authority of prior consent, referring to it as “power to veto the adoption of the general budget, thus restricting the scope for action of the democratically elected legislature and allowing the President of the Republic to dissolve the parliament.”

Foundation

Hungary’s National Assembly founded the Budget Council in November 2008 pursuant to an agreement with the International Monetary Fund earlier that month to provide Hungary’s government with a 15.7-billion-dollar emergency loan to finance its operations amid the deepening global financial crisis (source A and B in Hungarian).

In its original form, the three-member council was an advisory body only and had no veto rights with regard to proposed government budgets. The Hungarian Socialist Party-controlled National Assembly approved the appointments of the initial members of the newly established Budget Council to nine-year terms in February 2009. Two of the three original members of the council were members of the Monetary Council of the National Bank of Hungary, though resigned from their posts immediately following the approval of their appointments in order to avoid conflict of interest (source in Hungarian).

Fidesz-KDNP Changes

In December 2010, the FideszChristian Democratic People’s Party (KDNP)-controlled National Assembly withdrew all government funding for the Budget Council and dismissed its members appointed the previous year (source A and B in Hungarian). In accordance with the National Assembly amendment of the law that established the Budget Council, the body operated with the following three unpaid members: National Bank of Hungary Governor András Simor; State Audit Office President László Domonkos; and National Bank of Hungary Supervisory Committee Chairman Zsigmond Járai.

The new constitution, or Fundamental Law, that Fidesz-KDNP National Assembly representatives adopted in April 2011 and which came into effect on January 1, 2012 stipulates that the Budget Council shall be composed of the president of the State Audit Office, the governor of the National Bank of Hungary and one further member to serve as chairman of the body. The Fundamental Law provides the National Assembly with the authority to elect the president of the State Audit Office to a 12-year term and the president of Hungary to appoint the governor of the National Bank of Hungary and the chairman of the Budget Council to six-year terms.

The Fundamental Law furthermore states that “prior consent of the Budget Council shall be required for the adoption of the Act on the central budget” in order to satisfy the provision of the Fundamental Law requiring all government budgets to reduce state debt as long as such debt exceeds 50 percent of GDP (see Article 44 of the Fundamental Law in English).

The Fundamental Law does not explicitly prohibit the Budget Council from refusing to provide “prior consent” to proposed government budgets on grounds other than its failure to satisfy the requirement that all government budgets serve to reduce state debt as long as such debt exceeds 50 percent of GDP.

The Fundamental Law authorizes the president of Hungary to dissolve the National Assembly and call new elections if the body fails to approve a government budget by March 31 of the year in question.

The Fundamental Law therefore provides the Budget Council with the authority to unilaterally instigate the dissolution of the National Assembly through refusal to provide “prior consent” to proposed government budgets. Due to the discrepancy between the terms of office of Budget Council members and parliamentary cycles, the body could potentially initiate the dissolution of a National Assembly and, therefore, government that are under the control of political forces that oppose those which appointed its members.

European Union Criticism

In July 2013, the European Parliament of the European Union adopted the Report on Fundamental Rights in Hungary, known informally as the Tavares Report, criticizing many stipulations of Hungary’s Fundamental Law and its subsequent amendments on the grounds that they violated the fundamental European precepts of liberty, democracy and the rule of law.

Among these criticisms, the Tavares Report stated that “a non-parliamentary body, the Budget Council, with limited democratic legitimacy, has been granted the power to veto the adoption of the general budget, thus restricting the scope for action of the democratically elected legislature and allowing the President of the Republic to dissolve the parliament.” The report therefore called upon the government of Hungary “to restore the prerogatives of the parliament in the budgetary field and thus secure the full democratic legitimacy of budgetary decisions by removing the restriction of parliamentary powers by the non-parliamentary Budget Council.”

Current Members

The current members of the Budget council are: Chairman Árpád Kovács, whom former President Pál Schmitt appointed in January 2012; State Audit Office President László Domonkos, whom Fidesz-KDNP National Assembly representatives elected to the post in June 2010; and National Bank of Hungary Governor György Matolcsy, whom current President János Áder appointed in March 2013.

Last updated: May 28, 2016. 

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