Varga: E.ON purchase, savings co-ops no risk to deficit target

Initiatives

The state’s purchase of E.ON’s gas business in Hungary and spending on the integration of the country’s savings cooperatives will not put the 2013 fiscal deficit target at risk, National Economy Ministry Mihály Varga said in a year-end interview with national news service MTI.

The state-owned Hungarian Electricity Works (MVM) received a HUF 71 billion capital raise this year from the budget to cover the purchase of E.ON’s Hungary-based gas business. Also, more than HUF 135 billion in budget funding was used to support the integration of Hungarian savings cooperatives. 

Varga said the government had booked the capital raise in MVM as an equity transaction, which does not affect the accrual-based deficit.

“Eurostat made no comment on the transaction,” he said.

Addressing the funding for the savings cooperative integration, he explained that the allocation did not go to Takarékbank, the “central bank” for the cooperatives, but to savings cooperative integrator SzHISz.

“The preliminary stand of Hungarian bodies – the Central Statistics Office, the National Bank of Hungary and the National Economy Ministry – is that this was a market-like transaction,” said Varga. “That is, it does not affect the general government deficit as calculated with European Union methodology.”

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