Seasonally adjusted ESA deficit drops to preliminary 7.7% of GDP in Q3


The seasonally adjusted net financing requirement of the Hungarian general government was 7.7% of the quarter's estimated GDP in the third quarter of 2006 according to preliminary figures reported by the National Bank of Hungary (MNB) on its website.

The preliminary Q3 figure is sharply down from a respective ratio of 11.5% in the first and 9% in the second quarter of this year. The National Bank figures are not adjusted for the effects of the pension reform. The bank is using its own GDP estimate when calculating the quarterly deficit ratios.
The net financing requirement offers a rough estimate for the ESA95 general government deficit, which is projected by the government to grow to 10.1% of GDP this year from 7.8% in 2005 before dropping to 6.8% of GDP next year and 3.2% (to around the respective 3% Maastricht criterion) in 2009. The figures include no adjustment for the effects of pension reform. The general government gross consolidated debt at nominal value and on a Maastricht basis was a preliminary Ft 15,861.1 billion (€61.2 billion) at the end of September 2006, or 69.9% of the GDP of the last four quarters.


The government projects Hungary's gross public debt to grow to 67.5% of GDP by the end of this year in its draft update to the country's revised convergence program from 61.7% last year without adjustment for the pension reform. The update, to be submitted to Brussels by December 1, projects Hungary's gross debt ratio to peak at 71.3% in 2008 before starting to fall gradually. The deficit ratios in the update are unchanged while the debt ratios are slightly below those in the revised convergence program approved by EU finance ministers in October. Without seasonal adjustment, the Q3 net financing requirement was a preliminary 3.7% of GDP in Q3, the bank said, after 15.2% of GDP in Q1 and 8.4% reported by the bank earlier. The central government covered its Q3 financing requirement mainly through long-term securities issues, and its deposits held with the central bank increased significantly in the period, the report noted.

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