State debt down slightly at end of Q3

MNB

Hungaryʼs state debt, calculated according to Maastricht rules, stood at 72.7% of GDP at the end of September, down from 73.6% of GDP at the end of June, the National Bank of Hungary (MNB) said on Friday concerning Hungaryʼs preliminary financial accounts.

The state debt ratio in Q3 2017 fell from 74.2% at the end of the third quarter of 2016, according to Hungarian news agency MTI.

In nominal terms, state debt reached HUF 26,956 billion at the end of Q3, rising from HUF 26,915 bln at the end of Q2. Net repayments decreased the nominal figure by HUF 13 bln, but revaluations increased it by HUF 54 bln in the third quarter.

State debt rose around HUF 816 bln in nominal terms from Q3 2016 to Q3 2017, as a balance of net borrowing of HUF 816 bln which was unmodified by FX exchange rate fluctuations as they balanced out over the four quarters.

Net liabilities of the general government amounted to HUF 23,119 bln, or 62.4% of GDP at the end of Q3 2017.

The net financing requirement of the general government, which MTI notes is a good approximation of the general government deficit, was HUF 691 bln, or 1.9% of GDP in the four quarters to the end of Q3. The general government had a net financing requirement of HUF 546 bln in Q2 2017.

In Q3 alone, net borrowing, calculated from the financing side, was HUF 63 bln or 0.7% of quarterly GDP. In Q2, net lending was HUF 26 bln or 0.3% of quarterly GDP.

In Q3 2017, net borrowing of the central government amounted to HUF 218 bln. On the assets side, there was a significant decrease in stocks of deposits with the central bank and credit institutions as seen in the previous quarter. The stock of short-term loans by the central government also fell, but there was a sharp increase within other financial assets, which can be explained by the liabilities related to advances granted to local governments.

On the liabilities side, the stock of long-term securities increased significantly due to transactions, with households and credit institutions being the main lending sectors. For the stock of Treasury bills, a decreasing trend continued in nearly all creditor sectors. The outstanding loan liabilities of the central government also declined sharply. There was a sharp decline in liabilities related to EU transfers.

Net lending of local governments was HUF 114 bln in Q3. Deposits placed with credit institutions rose significantly. Investments by local governments in government bonds rose slightly in the quarter, while there were net sales of Treasury bills. Other financial assets also decreased slightly. On the liabilities side, there was a significant shift only in other liabilities.

Net lending of the social security funds was HUF 40 bln in Q3. On the assets side, contribution receivables from households decreased. On the liabilities side, only the stock of short-term loans by central government decreased significantly.

Net lending of households, at HUF 1,697 bln, was equivalent to 4.6% of GDP in the four quarters to the end of September 2017. In Q3 alone, net lending stood at HUF 372 bln, equivalent to 3.9% of quarterly GDP.

Within householdsʼ financial assets, the stock of long-term government securities grew most strongly due to transactions in the quarter, while there was also a significant increase in cash, as well as shares and equity holdings. Deposits and pension fund reserves increased less sharply.

For liabilities, the stock of housing loans grew significantly, while there was a less intense increase in the stock of consumer loans.

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