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Eurostat confirms deficit figure, but with reservations

The EU statistics office Eurostat confirmed Hungaryʼs 2018 general government deficit and debt Tuesday as the figures sent to Brussels by Hungary. However, it expressed reservations on the classification of certain institutions, particularly the foundations of the National Bank of Hungary (MNB).

The Eurostat building in Luxembourg (photo: Wikimedia Commons)

For the first time, Eurostat expressed reservations on the classification of the Hungarian Hydrocarbon Stockpiling Association (MSZKSZ), as well as that of the MNB foundations. The figures and reservations were part of an Eurostat report on the first reading of government deficit and debt data for all member states, state news wire MTI reported.

Hungary had an accrual-based ESA-2010 general government deficit of 2.2% of GDP in 2018 according to the report, below the government target of 2.4% of GDP and unchanged from the figure reported to Eurostat by the Central Statistical Office (KSH) on April 1.

Government debt stood at HUF 29.807 trillion, or 70.8% of GDP, at the end of 2018 according to the Eurostat report, also unchanged from the figure calculated by the MNB and sent to Brussels.

In its note to the report, Eurostat expressed reservations on the reported data, arguing that in its view both the MSZKSZ - which is responsible for the countryʼs strategic hydrocarbon reserves - and the MNB foundations should be classified inside the general government.   

The accounting of the MSZKSZ inside the general government would increase government debt in 2015 by 0.3% of GDP, in 2016 and in 2017 by 0.4% of GDP, and in 2018 by an estimated 0.3% of GDP, Eurostat said, adding that the deficit figures would remain virtually unchanged.

Eurostat added that it is maintaining the reservation on the quality of the data reported by Hungary in relation to the sector classification of the foundations created by the central bank.

If the foundations were to be included in the general government, the deficit would be increased in 2015 by HUF 25.3 billion (0.1% of GDP), in 2016 by HUF 54 bln (0.2% of GDP), and in 2017 by HUF 33.7 bln (0.1% of GDP), according to the report. The debt figures would remain unchanged.

Eurostat first noted reservations regarding the sector classification of the MNB foundations in April 2018, MTI recalled. At that time, the agency concluded that "for the purposes of statistical classification under ESA rules, the MNBʼs foundations are government-controlled non-profit units and non-market producers and should, therefore, be classified in the general government sector."

Assets of the foundations totaled HUF 272.7 bln at the end of last year, and included HUF 113.6 bln in investment fund units, HUF 95.3 bln in real estate, HUF 47.6 bln in corporate bonds, and HUF 16.2 bln in bank deposits.