Hungaryʼs external debt continues to shrink

MNB

Hungaryʼs sustained net external financing capacity - the combined surplus of the current and capital accounts - has cut the countryʼs external debt, thereby reducing its external vulnerability, the National Bank of Hungary (MNB) said in a balance of payments report on Thursday.

Hungaryʼs current account surplus narrowed in the third quarter of last year on higher domestic demand, falling to 3.9% of GDP from 5% in the previous quarter, while the countryʼs net external financing capacity declined at a more moderate rate, from 6% to 5.2%, because of faster absorption of European Union funding, the MNB said in the report, quoted by national news agency MTI.

In absolute terms, the current account surplus came to EUR 0.8 billion and the capital account surplus reached EUR 0.3 bln, giving the country a net external financing capacity of EUR 1.1 bln.

Hungaryʼs ratio of gross external debt to GDP fell by 2.1 percentage points to 63.8% in Q3. Net external debt to GDP was down 1.6 percentage points at 14.1%. The banking sectorʼs external debt dropped substantially, while the external debt of the general government and non-financial companies fell to a smaller degree, the MNB said.

Hungaryʼs short-term external debt fell by EUR 1.1 bln to EUR 18.7 bln.

The central bank noted that its international reserves stood at EUR 22.2 billion at the end of September, still well over the level expected by investors.

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