Hungaryʼs external financing capacity exceeds €8 bln in Q1-Q3
September balance of payment data published by the National Bank of Hungary (MNB) on Monday suggest that, thanks to higher net EU fund utilization and a rising trade surplus, the countryʼs net external financing capacity surpassed €8 billion, a new high, in Q1-Q3.
The monthly figures offer the first look at Q3 and Q1-Q3 balance of payment developments until the MNB publishes the official first reading of Q3 figures on December 23.
The central bank reiterated that much of the monthly data are estimates.
The preliminary monthly current account figures add up to a Q3 surplus of €2.1 bln, which is nearly €1 bln up from a year earlier, and the largest quarterly c/a surplus since Hungary started running a surplus after the global economic and financial crisis. A rising surplus on the trade of goods and services provided an explanation for about half of the year-on-year increase.
Preliminary Q3 external financing capacity came to €3.2 bln, up nearly €1.1 bln year-on-year.
Net transfers from the EU added up to a preliminary €1.6 bln in July-September, as shown by the accrual-based figures which reflect the actual utilization of the funding. The net inflow rose more than €600 million from a year earlier but fell from the Q2 peak of €1.9 bln.
Within the total, quarterly capital transfers from the EU slowed to just over €1 bln in Q3 from over €1.4 bln in Q2, implying that the utilization of EU funds slowed before year-end, the deadline for the completion of projects that won EU funding in the 2007-2013 funding cycle.
The stateʼs gross receivables from the EU rose by a preliminary €1.2 bln in Q3, climbing on a suspension of disbursements of EU funds to Hungary, putting a high bridging burden on the countryʼs central budget. The gross state receivables, counted among other investments, rose by an already unusually high €419 mln in Q2. Brussels lifted the suspension late in September, and the receivables could have dropped by some €750 mln in October when the EU transferred about HUF 233 bln of the suspended funding.
The September figures imply that Q1-Q3 external financing capacity was slightly above €8 bln, doubling from a year earlier, and already exceeding the highest ever annual surplus, of €7.6 bln, reached in 2013.
Net EU fund utilization explained €4.9 bln of the Q1-Q3 external financing capacity surplus. It rose nearly €1.8 bln from the first three quarters of 2014. Another factor was the widening trade surplus which rose to a preliminary €7.7 bln in Q1-Q3 from HUF 6.1 bln in the same period last year.
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