Eurostat expresses ‘reservation’ over exclusion of Eximbank from government sector

History

Eurostat, the statistics office of the European Union, has expressed its reservations regarding the exclusion of Magyar Eximbank from the government sector in Hungaryʼs latest Excessive Deficit Procedure (EDP) report, Eurostat said yesterday, according to Hungarian news agency MTI.

“Eurostat is expressing a reservation on the quality of the data reported by Hungary in relation to the sector classification of Eximbank (Hungarian Export-Import Bank Plc). Eximbank needs to be reclassified inside the general government sector which will result in an increase in government debt,” Eurostat said.  

In a joint statement issued after Eurostatʼs announcement, Hungaryʼs Central Statistics Office (KSH) and the National Bank of Hungary (MNB) acknowledged Eurostatʼs reservation but said “Hungarian statistical authorities, however, view the classification of Eximbank otherwise”.

Eurostat recommended reclassifying Eximbank as a “captive financial institution”, which does not provide financial services to the general public but invests or lends funds for a limited group of clients for a special purpose. Eximbank does not fit this definition, as it “is engaged in actual financial intermediation, it raises funds in the market and offers financing to a broad range of market participants”, KSH and the MNB said.

KSH and the MNB said Eurostatʼs decision to reclassify Eximbank was not in line with the EUʼs recently adopted ESA2010 rules on national accounts “which spreads uncertainty in the statistical methodology and disrupts the harmony between the statistics of national accounts”.

“Hungarian statistical authorities are still seeking to clarify the issue and to that end, in the near future they will initiate a consultation at forums competent in the issue regarding the interpretation of the sectorization of captive financial institutions in accordance with the ESA 2010 regulation,” KSH and the MNB said.

National Economy Minister Mihály Varga acknowledged the dispute earlier and stressed that outlays of Eximbank are business loans with a return. Hungary is ready to defend its stand in court, he added.

Varga commented on the matter in April, after Eurostat told business news portal Portfolio.hu that it had recommended Eximbank be shifted to the general government.

Portfolio.hu estimated that including the bank in the general government would not widen the deficit, but would raise state debt by the equivalent of two percentage points of GDP for the past two years.

Portfolio.hu also noted that Eximbank had started making domestic outlays after lawmakers cleared it for such lending in 2013.

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