EU transfers boost central government deposits in August, MNB says

Average deposits of the central government at the National Bank of Hungary (MNB) rose HUF 215 billion in August compared to July mainly on the inflow of European Commission funding, the MNB said when publishing its preliminary statistical balance sheet on Monday.

The EU transfers were the main factor behind a HUF 510 billion increase in the MNB's average foreign assets in August, the bank said. The forint value of foreign assets was also boosted by the weakening of the forint.

The increases followed a HUF 529 billion drop in the central government's average deposit and a HUF 542 billion drop in average central bank's external assets in July, depleted by the government's purchase of a 21.2% stake in Hungarian oil and gas company MOL for EUR 1.88 billion.

Central government deposits averaged HUF 1,647 billion in August 2011, up HUF 648 billion from the end of last December, and up HUF 269 billion in one year.

The central government deposits with the central bank also rose in an end-of-month comparison. They stood at HUF 1,944 billion at the end of August, up HUF 354 billion in a month as central government forint deposits rose HUF 146 billion to HUF 818 billion and its foreign currency deposits rose HUF 208 billion to be worth 1,126 billion. The government's forint deposits rose HUF 546 billion and its foreign currency deposits rose HUF 322 billion from the end of December, and were up, respectively, by HUF 417 billion and HUF 99 billion, from twelve months earlier.

Forint liquidity of the banking sector was little changed in August after a slight fall in July, as a HUF 157 billion decline in the stock of outstanding two-week MNB bills was offset by a similar rise in one-day deposits, the MNB said.

The average value of two-week MNB bills held by residents fell HUF 310 billion to HUF 3,653 billion, and the stock held by non-residents rose HUF 154 billion to average HUF 563 billion in August.

Credit institutions' overnight deposits with the MNB averaged HUF 259 billion, rising HUF 131 billion from July, their other deposits rose HUF 10 billion to HUG 38 billion.

Credit institutions' current account deposits held with the central bank fell HUF 15 billion to HUF 455 billion, exceeding the reserve requirement by a slight HUF 4.5 billion.

Currency in circulation rose by HUF 85 billion from July to average HUF 2,463 billion in August, reflecting the payment of real yields to former private pension fund members.