State debt, minus Eximbank, at 72.2% of GDP at end of Q2

Adding Eximbankʼs debt to the state debt, Maastricht debt was 2.0 percentage points higher, at 74.2%, than the ratio calculated under financial accounts methodology. This debt ratio was up from 73.9% at the end of Q1 2018, but down from 75.7% in Q2 2017.

The latest MNB figure is down on that released in August, when the ratio of state debt to GDP, including Eximbank, was cited as 74.5%.

The MNB started publishing separate state debt ratios earlier this year, with and without the balance sheet of Magyar Eximbank, in line with a decision by Eurostat, which had maintained for years that Hungaryʼs export bank should be reclassified inside the general government sector, raising state debt.

In nominal terms, the 72.2% state debt figure was equivalent to HUF 28,743 billion at the end of Q2, rising from HUF 28,045 bln at the end of the first quarter. Net borrowing increased the nominal figure by HUF 376 bln, and revaluations by HUF 322 bln in the second quarter.

State debt rose from a year earlier as a balance of net borrowing of HUF 1,334 bln and revaluations of HUF 486 bln, the MNB noted.

The net financing requirement of the general government, which MTI notes is a good approximation of the general government deficit, was HUF 1,338 bln, or 3.4% of GDP in the four quarters to the end of Q2. The general government had a net financing requirement of HUF 150 bln in Q2 2018, 1.5% of quarterly GDP.

In the second quarter, net borrowing of the central government was HUF 187 bln. On the assets side of the sub-sectorʼs balance sheet, the increase in the stock of other accounts receivable was the most significant. The stock of deposits placed by central government also increased. Large net issues of discount Treasury bills played the most important role in the increase in financial liabilities, noted the MNB.

Net lending of local governments was HUF 18 bln in Q2. On the assets side of the sectorʼs balance sheet, only other assets increased considerably. The decline in the stock of deposits with credit institutions was offset by an increase in the stock of deposits with the central government sub-sector. The stock of securities held by local governments was broadly unchanged.

Net lending of the social security funds was HUF 19 bln. On the assets side of the sub-sectorʼs balance sheet, deposits with central government and tax receivables increased slightly. On the liabilities side, there was a slight decline in the stock of short-term loans granted by central government.

Net lending of households, at HUF 2,348 bln, was equivalent to 5.9% of GDP in the four quarters to Q2 2018. In Q2 alone, net lending stood at HUF 633 bln, equivalent to 6.1% of quarterly GDP.

Within householdsʼ financial assets, there was a significant increase in currency, current account deposits, and debt securities issued by central government. On the liabilities side, the stock of housing loans within borrowing from credit institutions rose significantly due to transactions. The stocks of consumer and other loans also increased, according to the MTI report.