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Hungary general govt net financing capacity rises on transfer of pension assets

Hungary's general government net financing capacity was HUF 1,574 billion, or 5.7% of GDP, in the four quarters to Q2 2011, rising because of capital transfers from households to the general government in the form of withdrawals from private pension funds in the first quarter, the National Bank of Hungary (MNB) said in preliminary financial accounts data published on Tuesday.

Hungarian members of private pension funds had until the end of January to opt out of a move, along with their assets, back to the state pension pillar. About 97% of members returned to the state pillar.

Excluding the assets transferred, the general government had a net financing requirement equal to 4% of GDP in the four quarters to Q2 2011, the MNB said.

General government consolidated gross debt at nominal value amounted to HUF 21,285 billion or 76.8% of GDP at the end of the period. Net debt came to HUF 14,975 billion or 54.0% of GDP. Net debt fell because of the pension transfers in Q1, the MNB said. Gross debt fell in Q2 mainly because of the withdrawal of government securities that were part of the pension fund assets transferred, it added.

In Q2, the general government net financing requirement came to HUF 336 billion or 4.8% of GDP for the quarter.

Households had a net financing requirement of HUF 1,512 billion, or 5.5% of GDP, in the four quarters to Q2 2011. Excluding the transfer of pension fund assets, households had net financing capacity of HUF 1,166 billion or 4.2% of GDP.

In Q2, households had net financing capacity of HUF 277 billion or 4.0% of GDP for the quarter..

On the assets side, household holdings of cash, deposits, debt securities issued by credit institutions, mutual fund shares and other accounts receivable increased significantly in Q2, the MNB said. On the liabilities side, forint loans increased and foreign currency loans declined by more than the increase in forint borrowing, it added.

The detailed financial accounts for Q2 will be published on October 3, 2011.