Hungary’s net external financing capacity could reach new peak in 2015

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Hungary net external financing capacity, calculated as a sum of the current and the capital accounts, reached €7.544 bln in the first three quarters of 2015, balance of payment data published by the National Bank of Hungary (MNB) today show.

The three-quarter financing surplus was up by €3.5 bln from a year earlier and neared the highest ever annual surplus, of €7.6 bln, reached in 2013.

Net transfers from the European Union totalled €4.711 bln in the first three quarters according to the accrual-based balance of payment statistics, explaining the bigger half of the financing capacity. The net EU transfers rose €1.7 bln from year-on-year. The net annual inflow was about €5.4 bln both in 2013 and in 2014. 

Adjusted for seasonal effects, Hungaryʼs net external financing capacity was €2.502 bln or 9% of quarterly GDP in the third quarter.

The adjusted Q3 surplus was down from the second quarter when it reached €2.621 bln. It was up €668m from a year earlier.

The unadjusted net external financing capacity came to €2.763 bln in the third quarter, up from the second quarter mainly due a higher surplus on goods.

Using adjusted figures net transfers from the European Union totalled €1.930 bln in Q3, up €10m from the previous quarter and up 380m in one year.

In terms of the unadjusted values net primary income amounted to €251m and the surplus on current transfers to and from the EU was €288m. Funds received from the EU, recorded as capital transfers came to €1.021 bln.

The current account surplus reached an unadjusted €1.725 bln in Q3.

Adjusted for seasonal effects, the current account surplus came to €1.304 bln, up €103m in a quarter. A higher surplus for the balance of services lifted the current account surplus.

Outward investments by Hungarian residents rose by €533m and inward investments by non-residents by €1.079 bln in Q3.

Investments in equities reduced the value of Hungarianʼs investments abroad by €553m but reinvested earnings increased it by €282m. Capital withdrawals in the form of superdividends reduced foreign investment by €76m. Transactions in debt instruments showed a net €805m increase.

Non-residents in Hungary increased their investments with the value of equities rising €93m and reinvested earning reaching €1.54 bln. The balance of transactions in debt instruments showed a €555m decrease in net liabilities.

Portfolio investment transactions showed a net outflow of €1.427 bln in the third quarter, reflecting a €125m increase in assets and €1.302 bln decrease in liabilities.

Other investments showed an outflow of €4.611 bln. This reflected an €1.341 bln increase in assets (including a €1.283 bln increase in net assets vis-a-vis the EU, reflecting the suspension of the disbursement of EU funding between April and September)and a decline of €3.27 bln in liabilities. The most significant component of the latter was a €1.786 bln decline in credit institutions’ deposits.

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