Anita Boros, Gyula Koi (eds): Sustainability and Law
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6. Case study: Sustainability across the law in Hungary (László Vértesy)
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6.2. The Interpretation of Sustainability in the Hungarian Legal Framework
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6.2.2. Economy, Finance

6.2.2. Economy, Finance

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Sustainability in economic governance is secured through legislative frameworks addressing public funds, state property, and finance. The Act CXCIV of 2011 on Economic Stability mandates budgetary sustainability and debt reduction.1 Article 36 of the FundamentalLlaw states that the National Assembly may not adopt an Act on the central budget as a result of which government debt would exceed half of the total gross domestic product (abbr. GDP). In order to finance the budget deficit of the central budget, the minister responsible for public finances, through the State Debt Management Centre (abbr. ÁKK Zrt.) ensures the maintenance/sustainability of the solvency of the central budget. Act XXXII of 2013 on the promulgation of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union considers that, in order to preserve the stability of the euro area as a whole, it is essential for governments to ensure the stability and sustainability of their public finances and to prevent the emergence of excessive government deficits, which requires the introduction of specific rules, including the “budgetary balance rule” and the automatic correction mechanism.2 Act CXCV of 2011 on Public Finance states that in the justification of the bill on the central budget, the Government shall present, as part of the medium-term budget planning, an assessment of the long-term sustainability of the main government policies, presenting the policies with a direct long-term impact, and in particular present the long-term development of state pension, health, education and other age-related expenditures (Sec. 22).3 The Government Decree No. 282/2008 (XI. 28.) on the promulgation of the Memorandum of Understanding between the Republic of Hungary and the European Community states that Hungary’s balance of payments will help the country to continue and intensify its fiscal consolidation efforts, which began in mid-2006, and to make progress in fiscal management and financial sector regulation, including supervisory reforms and other measures aimed at ensuring prudent, stability-oriented and sustainable economic policies; further steps to improve the sustainability of the pension system and formulating proposals for possible future steps based on the expert work of the “Pension and Old Age” roundtable.4 Sustainability considerations are integrated into public procurement (Act CXLIII of 2015) to take sustainability aspects into account (Sec. 28),5 and asset management laws promote long-term, transparent use of national resources as a sustainable asset management (Preambles of Acts CVI of 2007, and CXCVI of 2011).6

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Within the National Tax and Customs Administration (NAV), the designated minister shall operate a Committee Responsible for Sustainable Formalisation of the Economy to measure the effectiveness of the measures introduced (Act CXXII of 2010, Sec. 14/A).7 Ensuring the sustainability of public finances is a crucial concern for the European Union, particularly in the context of transfer pricing, which is focused on tax base erosion and profit shifting.8

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The Hungarian National Bank (abbr. MNB, Act CXXXIX of 2013 on Hungarian National Bank) through the monetary policy – without compromising its primary objective (price stability) – supports the maintenance of the stability of the financial intermediation system, the increase of its resilience, the ensuring of its sustainable contribution to economic growth and, with the means at its disposal, the Government’s policy on economic and environmental sustainability (Sec. 3).9 The MNB implements Articles 5–7 of Regulation (EU) 2020/852 establishing a framework for the promotion of sustainable investment (like green finance instruments, green mortgage bonds; Decree 22/2022)10 and sustainability-related disclosures in Regulation (EU) 2019/2088 and Regulation (EU) 2019/2089 (Sec. 40). Furthermore, it has taken a number of measures to promote green finance in Hungary: sustainable financial instruments; the Funding for Growth Scheme for Green Home Programme (refinancing instrument for retail loans to create a healthier housing stock); green debt securities; green lending; and the Green Mortgage Bond Purchase Programme.11 Sustainable finance guidelines set by an international organisation include: (i) The Green Bond Principles issued by the International Capital Market Association (The Green Bond Principles, 2018 and subsequent versions); (ii) Green Bond Standards issued by the Climate Bonds Initiative (Climate Bonds Standard V3.0 and subsequent versions).

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The act on credit institutions and financial enterprises (Banking Act) requires that the performance-based remuneration may only be paid and the executive or employee shall only be entitled to performance-based remuneration if (i) the financial situation of the credit institution is sustainable, and (ii) the performance of the credit institution, the relevant organisational unit and the executive or employee justifies it (Sec. 118).12 Similarly to this, the act on investment firms defines performance remuneration: specifically, the part of the remuneration that the investment firm may provide to a manager and an employee in addition to the basic remuneration if the latter provides sustainable and risk-adjusted performance exceeding those specified in the employment contract or performs tasks not specified therein.13 The performance remuneration may only be paid and a manager or employee shall only be entitled to performance remuneration if (i) the financial situation of the investment firm is sustainable , and (ii) the performance of the investment firm, the relevant organisational unit and the manager or employee justifies it. The Financial Authority (abbr. MNB) require an investment firm, if its liquidation or cessation of its activities is necessary – taking into account the viability and sustainability of its business model and strategy – to take into account realistic requirements and resources, both in terms of time horizon and in terms of maintaining solvency capital and liquid resources, throughout the entire process of exiting the market (Sec. 101).
 
1

2011. évi CXCIV. törvény Magyarország gazdasági stabilitásáról https://njt.hu/jogszabaly/2011-194-00-00.58#CI

Kutasi G., Füzesi K., Marton Á., Szijártó N. (2024). Államadósság-menedzsment a fenntartható finanszírozásért. [Public debt management for sustainable financing]. In: Kutasi, Gábor (ed.). Gazdaságpolitika: nyitott gazdaságok gazdasági kormányzása. [Economic Policy: Economic Governance in Open Economies]. (Budapest:Ludovika Egyetemi Kiadó). 193-206.

2

2013. évi XXXII. törvény a gazdasági és monetáris unióbeli stabilitásról, koordinációról és kormányzásról szóló szerződés kihirdetéséről https://njt.hu/jogszabaly/2013-32-00-00

Benczes, I., & Kutasi, G. (2010). A költségvetési politika fenntarthatósága és a szabályalapú gazdaságpolitika (The sustainability of fiscal policy and a rule-based economic policy). Köz-gazdaság, 5(2), 59-74.

3 2011. évi CXCV. törvény az államháztartásról https://njt.hu/jogszabaly/2011-195-00-00.118#CI
4 282/2008. (XI. 28.) Korm. rendelet a Magyar Köztársaság és az Európai Közösség közötti Egyetértési Megállapodás kihirdetéséről https://njt.hu/jogszabaly/2008-282-20-22
5 2015. évi CXLIII. törvény a közbeszerzésekről https://njt.hu/jogszabaly/2015-143-00-00 - https://njt.hu/jogszabaly/en/2015-143-00-00
6

2007. évi CVI. törvény az állami vagyonról https://njt.hu/jogszabaly/2007-106-00-00

2011. évi CXCVI. törvény a nemzeti vagyonról https://njt.hu/jogszabaly/2011-196-00-00

7

2010. évi CXXII. törvény a Nemzeti Adó- és Vámhivatalról https://njt.hu/jogszabaly/2010-122-00-00.66#CI

485/2015. (XII. 29.) Korm. rendelet a Nemzeti Adó- és Vámhivatal szerveinek hatásköréről és illetékességéről https://njt.hu/jogszabaly/2015-485-20-22

8 Hulkó, G., Kálmán, J., & Lapsánszky, A. (2023). Sustainability in Public Finances Concerning Transfer Pricing in the EU. Chemical Engineering Transactions, 107, 523-528.
9 2013. évi CXXXIX. törvény a Magyar Nemzeti Bankról https://njt.hu/jogszabaly/2013-139-00-00.76#CI
10

22/2022. (VI. 11.) MNB rendelet a hitelintézetek jelzálogalapú eszközei és forrásai közötti lejárati összhang szabályozásáról https://njt.hu/jogszabaly/2022-22-20-2C

11. green mortgage: a loan or financial loan provided against a mortgage right based on real estate, including an independent mortgage right, which meets the definition of a green mortgage loan as set out in the documentation related to the green mortgage bond publicly published by the issuer and serves as collateral for an issued green mortgage bond;

12. green mortgage: a mortgage bond which, based on the documentation publicly published by the issuer, complies with one of the sustainable finance guidelines set out in Annex 1, and compliance is certified by a third party authorised to do so under the directive;

13. green refinancing mortgage: a refinancing mortgage secured by a) separate mortgage rights that are collateral for green mortgages, or b) in the case of a mortgage claim secured by a mortgage right, a mortgage loan secured by a mortgage right on real estate is considered a green mortgage.

11

Kandrács, C. (2023). Financing a sustainable economy in Hungary, opportunities and challenges: Decarbonisation, green transition, sustainable finance, central bank. Public Finance Quarterly/Pénzügyi Szemle, 69(1), 29-45.

Matolcsy, G. (2022). The appearance of economic, social, financial and environmental sustainability aspects in the practices of the national bank of Hungary. Public Finance Quarterly/Pénzügyi Szemle, 67(3), 315-334.

12 2013. évi CCXXXVII. törvény a hitelintézetekről és a pénzügyi vállalkozásokról https://njt.hu/jogszabaly/2013-237-00-00
13 2007. évi CXXXVIII. törvény a befektetési vállalkozásokról és az árutőzsdei szolgáltatókról, valamint az általuk végezhető tevékenységek szabályairól https://njt.hu/jogszabaly/2007-138-00-00
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