Hungary’s government is planning to introduce a programme to halt the debt chain in the construction industry, Prime Minister Gordon Bajnai said on Wednesday.
The programme named “safe hands” is based on Austrian and German models, Bajnai said.
It will involve the commissioning company, the contractor and the sub-contractor to sign a special contract through an external party, such as a legal firm or a bank. In the case of state-financed projects, the external party will be the State Treasury, Bajnai said.
Under the new system, the contractor will not be paid its next instalment until it fulfils payment obligations to subcontractors, Bajnai said.
The introduction of the programme will take several months and it is expected to create tension, but it will bring some substantial positive changes to the industry, he said. The necessary legislation is scheduled to be completed before the end of the year, he added.