External financing capacity shrinks in Q2 - MNB

The external financing surplus has narrowed sharply from the high surpluses of around EUR 2.1 bln in both Q1 2018 and Q2 2017, although the factors behind the drop differ. The drop from a year earlier reflects a lower current account surplus, partly offset by a higher surplus on the capital account. Compared to Q1 2018, both the current and capital account surpluses narrowed. 

The current account surplus reached EUR 683 million in the second quarter and included a EUR 2.61 bln surplus in the trade of goods and services. Current transfers from the EU came to EUR 231 mln.

The capital account had a surplus of EUR 700 mln in Q2, of which net capital transfers from the European Union reached EUR 711 mln.

In a year-on-year comparison, a EUR 922 mln lower current account surplus was partly offset by a EUR 174 mln higher surplus on the capital account.   

Compared to Q1, the current account surplus shrank EUR 344 mln on a growing trade surplus coupled with more net investment income outflow, while the capital account surplus narrowed EUR 421 mln as net capital transfers of the EU dropped by a little over EUR 400 mln.   

The monthly financial account indicates that the Hungarian government paid out some EUR 365 mln in advances to successful applicants of EU funding in Q2. The EU could have reduced its debt on these commitments in June when these government receivables dropped by little more than EUR 100 mln. The government prefinanced some EUR 800 mln of EU money in Q1.

At the same time, the government transferred already received EU monies to the ultimate recipients, reducing its debt to them by EUR 30 mln in June alone, and by EUR 31 mln in Q2. This followed the EUR 21 mln it transferred to ultimate funding recipients in Q1.  

The central bank will publish second-quarter balance of payments data on September 20.