ÁKK chief: Higher mark-to-market deposits prevented drop in state debt ratio

MNB

A steep rise in mark-to-market deposits in Q4 last year prevented Hungary's state debt ratio from falling, CEO of the Government Debt Management Agency (ÁKK) György Barcza said in an interview in today’s issue of Hungarian economic daily Napi Gazdaság, for which he used to be the editor-in-chief prior to his appointment as ÁKK chief.

Hungary's gross consolidated government sector debt, calculated at nominal value, in line with Maastricht methodology, reached 77.3% of GDP at the end of 2014, unchanged from the end of 2013, a first reading published by the National Bank of Hungary (MNB) revealed on February 17. In nominal terms, gross consolidated government sector debt rose HUF 1,436 bln in one year to HUF 24,521 bln at the end of 2014. The net issues raised government debt by HUF 848 bln, the weakening of the forint raised government debt by HUF 530 bln, and other volume changes added an additional HUF 58 bln.

Barcza told the paper that the debt manager is planning to swap all FX debt into euros, and the significant strengthening of the U.S. dollar against the euro in Q4 raised the so-called mark-to-market deposits placed with the ÁKK by its swap partners.

The deposits that are calculated as part of Maastricht debt, increased from approximately €200-300 mln in previous years to €1 bln by the end of last year, while these special debt items raise debt only temporarily, and without accounting them, the debt ratio would have fallen by one percentage point, he said.

Earlier ÁKK figures revealed that mark-to-market deposits rose HUF 194 bln from the end of 2013 to HUF 311 bln at the end of 2014.

Barcza believes that unless the forint weakens considerably, the debt ratio is likely to drop to near 75% by the end of this year.

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