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Report: Hungary's redistribution rate rises in 2013

MNB

Hungary's redistribution rate – government expenditure as a percentage of GDP – rose by one percentage point from 2012 to 49.7% last year after a drop in the previous year, according to a report released yesterday by Eurostat, the statistics office of the European Union.

The report contains the final 2013 general government figures for all EU members, and is based for the first time on the new European System of Accounts (ESA2010) methodology. The Eurostat figures showed that government revenue in terms of GDP also rose in 2013, by 0.9 percentage points to 47.3%, increasing for the second year in a row under the new methodology.

The old ESA95 calculations showed a sharp drop in 2012. Hungary's 2013 general government deficit was 2.4% of GDP in 2013 and gross state debt reached 77.3% of GDP at the end of last year, unchanged from the ratios in Hungary's Excessive Deficit Procedure report, drawn up according to ESA2010 and sent to Brussels on September 30.

Except for a minor HUF 2.3 bln upward revision of the nominal 2013 general government deficit, to HUF 724.4 bln, the 2010-2013 deficit, debt and GDP figures and ratios in the Eurostat report are unchanged from those reported by Hungary in September. The changeover to ESA2010 lowered the 2010 and 2011 redistribution rates slightly from 50.0% under the ESA95 calculations, while the rate for 2012 was unchanged at 48.7%.

The effect was also moderate for the government revenue-to-GDP ratio, except for in 2011, when the rate dropped almost 10 percentage points to 44.4%. The big decline probably reflects the exclusion under ESA2010 rules of the transfer of private pension fund assets from state revenue. The adoption of ESA2010 raised Hungary's nominal GDP, slightly increased the deficit ratios (though turning the 2011 surplus into a deficit because of the booking of the pension assets) and cut the debt ratios as shown already in the September report.

Under the new methodology, Hungary's Maastricht debt ratio rose slightly to 81.0% of GDP at the end of 2011 and fell to 78.5% at the end of 78.5% before falling another 1.2 percentage points by the end of last year. Under the old ESA95 method the debt ratios were about 2 percentage points higher and the drop from a 82.2% peak in 2011 was only slight, to 79.8% at the end of 2013.

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