The seasonally adjusted net financing requirement of the Hungarian general government was 7.8% of the quarter's estimated GDP in the Q3 of 2006, the National Bank of Hungary (NBH) announced on its website on Tuesday.
The figure is slightly revised up from a preliminary 7.7% published in November. The seasonally adjusted net financing requirement ratio dropped sharply in Q3 from 11.5% in the first and 9% in the Q2 of last year. The general government gross consolidated debt at nominal value and on a Maastricht basis was Ft 15,864 billion (€62.9 million) at the end of September 2006, revised a slight Ft 3 billion up from the preliminary, and reached 68.6% of the GDP of the last four quarters. The debt/GDP ratio fell from 69.7% at the end of June. The bank is using its own GDP estimate when calculating the ratios. The National Bank figures are not adjusted for the effects of the pension reform. The deficit ratio would be 1.2 percentage point less, and the debt ratio would be 4.3 percentage points less were private pension funds accounted within the general government sector, the bank noted.
The net financing requirement offers a rough estimate for the ESA95 general government deficit, which is expected to fall somewhat below the upward revised 10.1%-of-GDP government target for 2006. Hungary's ESA95 general government deficit was 7.8% of GDP in 2005 and is targeted to drop to 6.8% of GDP this year. The figures include no adjustment for the effects of pension reform. The government projected Hungary's gross public debt at 67.5% of GDP by the end of 2006 in its December update to the country's convergence program. The figure is without adjustment for the pension reform, and is up from a respective 61.7% ratio at the end of 2005.
The December update projects Hungary's gross debt ratio to peak at 71.3% in 2008 before starting to fall gradually. The deficit ratios in the update were unchanged while the debt ratios were slightly below those contained in the program approved by EU finance ministers last October. Without seasonal adjustment, the Q3 net financing requirement was 3.7% of GDP in Q3, the bank said. The figure is unchanged from the preliminary and comes after an unadjusted 15.2% of GDP in Q1 and 8.4% in Q2 reported 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 said. Local governments combined had a revenue surplus in the period while their debt on bank loans also grew, which resulted in an increase of their deposits. (Mti-Eco)