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ÁKK modifies 2020 financing plan to account for bigger deficit

The Government Debt Management Agency (ÁKK) said on Wednesday that it is updating its 2020 financing plan due to the increased funding requirement on the part of the government and the better than expected retail sales of securities, according to a report by state news wire MTI.

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The Finance Ministry has adjusted the deficit target of the 2020 budget because of the unfavorable economic outlook caused by the coronavirus pandemic, as well as fiscal policy actions intended to mitigate its negative economic impact. The cash-flow based deficit of the central government budget has increased by HUF 1.71 trillion from HUF 1.89 tln to HUF 3.6 tln, the agency noted.

ÁKK expects the amount of retail government securities held by individuals to increase from HUF 7.766 tln to HUF 8.547 tln by the end of 2020. However, the outstanding amount of retail government securities will decrease by HUF 119 bln because of the HUF 900 bln decline of the holdings of institutions. 

The planned volume of domestic market wholesale bond issuance has been increased by HUF 948 bln from HUF 3.397 tln to HUF 4.345 tln for the year. ÁKK plans to achieve this extra issuance in the currently used framework of weekly government bond auctions.

Out of the HUF 882 bln extra retail debt sales HUF 583 bln issuance has already been executed by mid-August and in the wholesale market, out of the HUF 948 bln extra bond auction issuance HUF 438 bln has already been executed, as ÁKK has continuously accepted higher than planned amounts at auctions.

Based on these projections, the medium-term strategic goal of increasing the outstanding amount of retail government securities held by individual investors from the end-2019 level of HUF 7.766 tln to HUF 11 tln by 2023 is maintained.

Regarding the foreign currency financing, there are no changes in the financing plan. ÁKK plans the total annual foreign currency bond issuance at EUR 4 bln, out of which EUR 3.5 bln was already executed in April and June.