Pandemic spending lifts state debt ratio to 71.9%

Debt

Image by xtock / Shutterstock.com

Government expenditures related to the coronavirus pandemic lifted Hungaryʼs state debt relative to GDP to 71.9% at the end of Q2 from 66.8% at the end of Q1, according to preliminary data released by the National Bank of Hungary (MNB), reports state news agency MTI.

 

Photo by xtock / Shutterstock.com

Hungaryʼs constitution stipulates that the year-end state debt ratio must decline each year until it reaches 50%, but the government projected the level would rise to 72.6% at end-2020 in an update of the countryʼs Convergence Program sent to Brussels in the spring.

 

The state debt ratio stood at 66.4% at the end of 2019. In absolute terms, state debt stood at HUF 33,200 bln at the end of Q2.

The MNB data show Hungaryʼs general government had a net financing requirement of HUF 1.094 trillion in Q2, equivalent to 10.6% of GDP for the period. 

The central governmentʼs net financing requirement came to HUF 693 bln in Q1, the net financing requirement of local councils reached HUF 175 bln and the net financing requirement of the social insurance funds was HUF 225 bln. 

Householdsʼ net financing capacity reached HUF 819 bln in Q2, the equivalent of 7.9% of GDP for the period.

Householdsʼ net financial assets stood at the equivalent of 113.4% of GDP at the end of Q2, calculating with unconsolidated financial assets of 136.9% of GDP and liabilities of 23.5% of GDP.

Data on transactions for the period show households added the equivalent of 7.0% of GDP to their cash and deposits, the highest level in years, while their holdings of equities rose by the equivalent of 2.0% of GDP, also an increase on a scale unmatched for years.

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