Magic weapon in fiscal policy? – Thoughts on the budget rules applicable to the local governments

It is a welcome development that budgetary sustainability and transparency have become the focus of domestic professional discussions. The debates that have livened up in the wake of the international conference organised by the State Audit Office and the National Bank of Hungary on rule based budgeting in the spring of 20062 and the public finance theses of the SAO published in the spring of 20073 indicate that thinking has turned towards institutional solutions. Being a loyal chronicler of these processes, the Public Finance Quarterly dedicated its second issue of 2007 to this subject. One of the most important suggestions found in international literature and practice is the application of budgetary rules as an institutional solution for the sustainability of the budget.