External financing capacity rises on higher EU transfers, c/a surplus

MNB

Hungaryʼs external financing capacity rose sharply in June from the previous two months to EUR 1.7 billion because of a bigger current account surplus and a jump in capital transfers from the European Union, monthly preliminary balance of payments data published by the National Bank of Hungary (MNB) on Tuesday show.

External financing capacity, calculated as the sum of the current account and capital balances, rose by EUR 731 million in June from May, and was up by more than EUR 1 bln from April. It totaled EUR 3.4 bln in the second quarter, rising EUR 1.3 bln from a year earlier and EUR 2 bln from the first quarter, preliminary figures indicate.

Capital transfers from the EU more than doubled from May to EUR 815 mln after rising almost fourfold between April and May.

April-June capital transfers from the EU came to a preliminary EUR 1.3 bln in an almost tenfold rise from the previous quarter, and up even more sharply year-on-year. Overall capital transfers moved parallel with EU transfers.

The current account surplus reached EUR 917 mln in June, widening almost 60% from April and nearly 50% from May on a higher surplus in the trade of goods and a surplus in secondary income, mainly in secondary income related to the EU, after deficits in the previous two months.

For the quarter, the current account surplus reached a preliminary EUR 2.1 bln, up from EUR 2 bln a year earlier and from EUR 1.2 bln in Q1 2017.

The services surplus, at just below EUR 700 mln, hardly changed in a month, while the Q2 surplus added up to EUR 2 bln, rising from EUR 1.8 bln a year earlier and from EUR 1.4 bln in Q1.

EU funding advances increase

The monthly financial account indicates that the governmentʼs payout of advances to successful applicants for EU funding rose markedly in June as "other government receivables" - the item including such advances - more than doubled to almost EUR 1.1 bln in June after a fourfold rise in May.

The advances reached EUR 1.6 bln in Q2 according to preliminary figures, after practically no such pre-financing was provided a year earlier and a EUR 565 mln reduction in such advances as the EU transferred already committed funding in Q1 this year.

At the same time, the volume of EU funding transferred from Brussels to the government but not yet transferred on to recipients dropped by a further EUR 21 mln. Such government liabilities fell by EUR 85 mln in the quarter, similar to a year earlier, and compared to a EUR 53 mln rise in the first quarter.

The MNB will publish a first reading of Q2 balance of payment data on September 20.

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