MNB: Govʼt debt up in H1 on seasonal and one-off effects


Image by Jessica Fejos

The government debt-to-GDP ratio rose to 79.6% in the first half of 2015 from 76.9% at the end of last year but the rise is attributable to seasonal and one-off effects, analysts at the National Bank of Hungary (MNB) Gergely Baksay and Ákos Szalai said in a study, Hungarian news agency MTI reported today.

In the first six months of this year, the government’s liquid financial reserves rose by HUF 400 bln, which was financed by bond sales, raising the debt.

The European Union delayed transfers of some of its funds, which forced the government to bridge these gaps temporarily, resulting in around HUF 450 bln of additional costs.

The purchase of Budapest Bank and the taking over of the Budapest Public Transport Companyʼs (BKV) debt load increased government debt by HUF 195 bln and HUF 52 bln respectively.

High level of margin deposits at the Government Debt Management Agency (ÁKK) coupled with a strong dollar raised the debt ratio.

Despite these effects, Baksay and Szalai still see government debt ratio falling in 2015, adding that it could be higher than the 75.6% forecast in their previous study in June.

The analysts advise giving priority to obtaining EU funds, lowering net debt issuance in H2 and speeding up the sale of Budapest Bank to ensure a lower debt-to-GDP ratio.


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