Hungary's counties and municipalities face difficult challenges. Participation in cost-cutting structural reforms
initiated by the central government means cutbacks to administrative overheads and tough decisions in public
services. At the same time, there are also challenges in modernising local infrastructures and in making full use of the
EU funds for development projects. This paper first looks at how meeting these challenges can be helped by better
budgeting, in particular regarding the transparency and oversight of accounts. Financing arrangements are also
examined and this reveals a general problem of complexity. Assessment of spending responsibilities suggests room
for improving the roles of counties and regions and a need for cutbacks in central-government influence on service
provision and public-sector wages at the local level.
