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Hungary state debt at 64.8% of GDP at the end of 2019

Hungaryʼs state debt (without Eximbank data) stood at 64.8% of GDP at the end of December 2019, down from 66.5% of GDP at the end of September and down from 68.4% a year earlier, the National Bank of Hungary (MNB) said on Monday concerning preliminary data of Hungaryʼs financial accounts, state news wire MTI reports.

State debt, including Eximbank data, was at 66.4% of GDP at the end of December, down from 68.2% at the end of Q3 and down from 70.2% in Q4 2018.

Hungaryʼs constitution requires the year-end debt-to-GDP ratio to fall each year until it reaches 50%.

MNB in 2018 started publishing separate state debt ratios, with and without the balance sheet of Magyar Eximbank, in line with a decision by Eurostat. Eurostat has maintained that Magyar Eximbank should be reclassified inside the general government sector, raising state debt.

In nominal value, state debt was equivalent to HUF 30.287 trillion at the end of Q4. It fell from HUF 30.373 tln at the end of Q3 but was up from HUF 29.198 tln from a year earlier.

In the fourth quarter, net borrowing decreased the nominal figure by HUF 85 billion, as transactions lowered the stock by HUF 16 bln and revaluations by HUF 69 bln.

Including Eximbank data the nominal value of state debt was HUF 31.040 tln at the end of Q4.

The net financing requirement of the general government, which is a good approximation of the general government deficit, was HUF 974 bln or 2.1% of GDP in the four quarters to the end of Q4. General government net borrowing was HUF 809 bln in the fourth quarter itself, equalling 6.2% of quarterly GDP.

Gen Govʼt breakdown and households data

In 2019 Q4, net borrowing of central government amounted to HUF 558 bln. Local governments borrowed HUF 214 bln and the net borrowing of the social security funds was HUF 37 bln.

At the end of Q4, the non-consolidated stock of the general governmentʼs assets and liabilities amounted to 33.2% and 88% of GDP, respectively. As a result, net liabilities of the general government amounted to 54.8% of GDP at the end of Q4.

Within financial assets of the general government deposits placed with the central bank and credit institutions decreased significantly, however, other assets rose sharply. There was also a more modest increase in equity and loans due to transactions.

Net lending of households at HUF 2.349 tln was equivalent to 5% of GDP in 2019. In Q4 alone net lending stood at HUF 835 bln, equivalent to 6.4% of quarterly GDP.

Within householdsʼ financial assets, there was a significant increase in long-term securities in Q4. By contrast, there was a marked decline in short-term government securities. Currency and current account deposits and insurance technical reserves increased considerably.

Within householdsʼ liabilities, the stock of consumer loans and other loans within forint loans taken from credit institutions increased substantially due to transactions. The stock of forint housing loans also rose, although to a smaller degree. Householdsʼ other liabilities rose as a result of the advances linked to social transfers and other payments typical at the beginning of the year.