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Hungary’s Maastricht debt 78.3% of GDP at end of 2009

Hungary's Maastricht-conform government debt reached 78.3% of GDP at the end of last year, and its net general government financing requirement -- a measure close to the ESA95 deficit -- was 4.4% of GDP last year, preliminary National Bank of Hungary (MNB) figures show.

Excluding one-off factors, the preliminary deficit measure surpassed the respective 3.9% government target by around 0.2 percentage point.

Gross consolidated debt of Hungary's general government, calculated according to the Maastricht criteria, stood at HUF 20,396 billion or 78.3% of GDP at the end of 2009, the National Bank of Hungary (MNB) reported based on preliminary financial account data on Tuesday.

The ratio was slightly down from 78.4% of GDP at the end of Q3 2009, and was slightly up from 78.0% projected for the end of 2009 in the January update of Hungary' EU convergence program. The debt ratio was 72.9% at the end of 2008.

The debt and ratios include the part of Hungary's IMF-EU-World Bank financial support package that the country has called down but not used.

Net government debt stood at HUF 15,285 billion or 58.7% of GDP at the end of 2009.

The net general government financing requirement was HUF 1,156 billion or 4.4% of GDP in 2009, preliminary MNB figures show.

The figure, which is a good approximation of the ESA95 fiscal deficit, is higher than the government's 3.9%-of-GDP ESA95 deficit target for 2009 and a 3.7% ratio in 2008.

One-off factors explained the larger part of the 0.5%age-point overshoot in 2009 borrowing requirement (deficit), still leaving a close to 0.2%age-point excess deficit if cleared for such effects, the report reveals. The MNB said that transfers related to an option to return from the private pension funds into the state pension system cut the annual borrowing requirement by HUF 36 billion or 0.14% of GDP, while a change in the accounting of reinvested income via the central bank on the financial accounts raised it by an annual HUF 119 billion or 0.46% of GDP.

The net government borrowing requirement in the fourth quarter of 2009 was HUF 256 billion or 3.6% of GDP in the period. The ratio was the lowest registered since a zero figure posted in Q3 2008. The net borrowing requirement jumped to 10.2% of GDP in Q4 2008, slowed to 5.2% of GDP in Q1 2009 and has fallen since.

On a seasonally-adjusted basis, Hungary's general government was a net lender, to the tune of 1.2% of GDP in the fourth quarter of 2009, an unprecedented position since 2000, the start of the period for which MNB figures are available.

The seasonally-adjusted net general government borrowing requirement bottomed out at 2.9% of GDP in Q1 2008. From then it rose steadily to reach as high as 6.9% of GDP in Q3 2009 before becoming a surplus in Q4.

In Q4 2009, the central government met its HUF 227 billion financing requirement by drawing HUF 142 billion from its deposits with the central bank, reducing its loans to banks by HUF 197 billion, by borrowing HUF 46 billion from abroad, and HUF 40 billion from other parts of the general government, the MNB preliminary figures show. Central government short-term debt on securities fell significantly, the MNB said. Figures show the overall stock of government securities fell in the quarter by HUF 118 billion. HUF 24 billion of the Q4 financing requirement came from evaluation changes, including exchange rate changes.

Local councils' net financing requirement reached HUF 153 billion in Q4 which they financed mainly from drawing HUF 73 billion from deposits and through borrowing. They took out HUF 87 billion in loans in Q4, including HUF 19 billion from domestic banks and HUF 10 billion from abroad.

The state social security funds had a net financing capacity of HUF 124 billion, due to the write-off of loans owed to the central government. (MTI – Econews)