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Hungaryʼs state debt 73.9% of GDP at end of 2016

Hungaryʼs state debt, calculated according to Maastricht rules, stood at 73.9% of GDP at the end of December, down from 74.3% of GDP at the end of September, the National Bank of Hungary (MNB) said on Friday concerning Hungaryʼs financial accounts, national wire service MTI reported.

In nominal terms, state debt reached HUF 25.922 trillion in Q4, slightly up from HUF 25.883 tln at the end of Q3 2016. Net repayments decreased the nominal figure by HUF 14 billion, but revaluations increased it by HUF 53 bln in the fourth quarter.

Net liabilities of the general government amounted to HUF 22.940 tln, or 65.4% of GDP, at the end of last year.

The net financing requirement of the general government, which is a good approximation of the general government deficit, was HUF 444 bln, or 1.3% of GDP, in the four quarters to the end of Q4. The general government, as a rare exception, was in fact a net lender at the end of Q3 as net lending reached HUF 62 bln.

In Q4 alone the general government deficit, calculated from the financing side, was HUF 705 bln, or 7.3% of quarterly GDP. In Q3 net lending was HUF 330 bln, or 3.7% of GDP.

In Q4 2016, net borrowing of the central government amounted to HUF 594 bln. On the assets side of the sub-sectorʼs balance sheet, there was a significant decline in deposits placed with the central bank and credit institutions. Lending to other sub-sectors of general government increased and there was some acquisition of equities. Other receivables of the central government increased significantly, with local governments, households and the rest of the world being the partner sectors involved.

Long-term securities stock down

On the liabilities side, the stock of long-term securities fell significantly due to transactions, mainly affecting non-resident holders. There were some net sales of government bonds, mainly to households. Purchases of Treasury bills by the household sector picked up, but the stock of short-term securities rose only slightly, as central government made net redemptions to several sectors. There was a significant increase in other liabilities related to EU transfers.

Net borrowing of local governments was HUF 92 bln in Q4. Local government deposits placed with central government and credit institutions rose. There was a slight decline in Treasury bills held by local governments and their trade receivables also fell. Short-term borrowing by local governments increased due to advance payments of wages at the end of the year.

Net borrowing of the social security funds was HUF 19 bln. On the assets side of the sub-sectorʼs balance sheet, the contribution of receivables from households rose. On the liabilities side, the stock of short-term lending by central government increased.

Net lending of households, at HUF 1.574 tln, was equivalent to 4.5% of quarterly GDP in the four quarters to the end of 2016. Within householdsʼ financial assets, the stock of deposits rose the most strongly. The increase in the stock of cash and deposits was closely related to the higher outflow of wages characterizing the end of the year and payments of EU funding. Within investments by households, purchases of government securities continued to be dominant.