HUF 200 bln in municipal investments to be diverted
A total of HUF 200 bln in liquid municipal assets could be turned into government bond holdings in the event that the bill proposed by Cabinet Chief János Lázár last week is passed, online economy and business news portal vg.hu reported today.
The aim of the bill is to decrease the share of bank deposits and turn them into state debt holdings, Lázár reportedly said last week.
According to data published by the National Bank of Hungary (MNB), however, 60% of the HUF 549,58 bln in municipal deposits were current account or cash deposits, which suggests that this amount is needed for short term financing of municipal operations and it could be problematic if they are transformed into long-term government bond holdings.
Short term deposits amount to HUF 188 bln, while long-term deposits are negligible. Conversely, state bond assets owned by municipalities in 2015 amounted to only HUF 26,3 bln, while 24 municipalities had assets managed by the now bankrupt Quaestor group, founded by Fidesz-friendly Hungarian entrepreneur Csaba Tarsoly, who is currently under arrest.
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