The National Bank of Hungary (MNB) will raise the amount of government securities it buys weekly in the framework of an assets purchase program from some HUF 15 billion to around HUF 40 bln, deputy governor Barnabás Virág said, according to a report by state news wire MTI.
The Council said in a statement issued on Tuesday that it decided to increase the scale of the MNBʼs QE program because of external risks posed by the global deterioration in the pandemic situation in recent weeks as well as a higher government financing requirement due to stimulus spending in the face of the COVID-19 crisis.
It added that it intends to use the QE program "to the extent and for the time necessary", while continuing to buy longer-term bonds to support an extension in the maturity structure of government debt.
The Council noted that the rising cost of measures to protect the economy from pandemic fallout as well as a reduction in the tax base had caused the budget deficit to swell to 5.9% of GDP by the end of the first half. At the same time, the state debt-to-GDP ratio rose to 71.9% as GDP fell and the financing requirement grew, they added.
MNB bought a little more than HUF 14 bln of bonds at a weekly QE auction on Tuesday. It bought HUF 15 bln of bonds at the previous auction. It has made no purchases of government securities outside of the auctions for weeks.
Virág said the increased QE purchases would be made both at the weekly auctions and outside of the auctions.