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General gov't net borrowing reaches 5.9% of GDP

Net borrowing of Hungary's general government reached HUF 1,538 billion or 5.9% of GDP in the four quarters to 2009 Q3, fresh financial accounts data published by the National Bank of Hungary (MNB) on Monday show.

Net borrowing of the general government reached HUF 246 billion, or 3.8% of GDP, in Q3.

Consolidated gross debt of the general government at nominal value, calculated according to European Union methodology, was HUF 20,423 billion, or 78.4% of GDP, at the end of Q3.

The central government financed its borrowing requirement of HUF 200 billion in Q3 mainly with foreign loans and issues of long-term securities. Deposits with the central bank and lending to credit institutions grew, while existing liabilities to credit institutions fell. Net lending of local governments of HUF 60 billion was reflected mainly in an increase in deposits with credit institutions. The social security funds financed their borrowing requirement of HUF 106 billion mainly by increased borrowing from the central government.

Households' net lending amounted to HUF 933 billion or 3.6% of GDP in the year to Q3. In Q3, net household lending was HUF 108 billion, or 1.7% of GDP.

Within the sector's financial assets, foreign currency deposits and pension fund reserves increased sharply. By contrast, holdings of cash, central government debt securities and listed shares fell significantly, due to transactions. On the liabilities side, outstanding forint and foreign currency borrowing rose. The small change in the forint exchange rate had little impact on the values of assets and liabilities in Q3, the MNB said.

Net lending of non-financial corporations amounted to HUF 575 billion or 2.2% of GDP in the four quarters to Q3. In Q3, the sector’s net lending was HUF 219 billion, or 3.4% of GDP.

Within financial assets, non-financial corporations increased their holdings of other assets and sharply cut their holdings of deposits with credit institutions and debt securities issued abroad. On the liabilities side, the increase in equity liabilities and the declines in outstanding foreign loans and borrowing from domestic credit institutions were dominant.

Net lending of the rest of the world, or the whole-economy borrowing requirement, amounted to HUF 55 billion or 0.2% of GDP in the year to 2009 Q3. In 2009 Q3, the sector’s net lending was HUF 8.8 billion, or 0.1% of GDP.

Within financial assets, non-residents increased their holdings of government securities and lending to the central government. In addition, lending to credit institutions and holdings of equity assets, as well as equity participation in enterprises also rose. By contrast, deposits with credit institutions and outstanding lending to non-financial corporations fell sharply. On the liabilities side, there was an increase in holdings by the MNB of long-term securities and a fall time deposits. (MTI-ECONEWS)