The debate on whether Magyar Eximbank should be classified inside the general government sector has been ongoing for several months between Eurostat and the Hungarian government. In October last year, Eurostat stated that it “considers that Eximbank should be reclassified inside the general government sector which will result in an increase in government debt.”
From February this year, the National Bank of Hungary (MNB) presented for the first time a separate state debt ratio that includes the balance sheet of Magyar Eximbank, in line with the decision by Eurostat. At the same time, however, Hungaryʼs Central Statistical Office (KSH) said it maintains its stand that the inclusion of Magyar Eximbank in the general government “does not serve the accurate presentation of financial trends and is not in line with the methodology on which national accounts are based.”
Things have changed since then, with the KSH now including Eximbank in the government debt ratio. In a response sent to Világgazdaság, the KSH said state debt has decreased from 76% of GDP at the end of 2016 to 73.6% now. In another response, this time from the Ministry for National Economy, the government maintained its position that statistically, Eximbank is not part of the general government sector.
Recently, Eurostat accepted deficit and debt figures communicated by the Hungarian government. In its report released on Monday, Eurostat withdrew its reservations on Eximbank, but maintained that the MNBʼs so-called Pallas Athéné foundations should be included in the general government sector. The economy ministry labeled this as “completely absurd,” Világgazdaság reported.
Eurostat concluded that “for the purposes of statistical classification under ESA rules, the MNBʼs foundations are government-controlled non-profit units and non-market producers and should, therefore, be classified in the general government sector.”
Assets of the Pallas Athéné foundations came to HUF 269.8 billion at the end of March, the foundationsʼ asset manager said earlier.
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