Debt refinancing to focus on forint, retail issues

MNB

Hungaryʼs government plans to continue refinancing its maturing FX debt with forint-denominated issues and boost the share of state debt held by retail investors, the text of the 2017 budget bill shows, Hungarian news agency MTI reported today.

The ratio of FX central government debt to GDP could fall from 19% at the end of this year to 16.4% at end-2017, while the ratio of forint debt should increase from 52% to 54.3%, according to the bill. Additionally, retail investors could hold 17.8% of central governmental debt in forint-denominated securities by the end of 2017, though their share would be even bigger when taking into account holdings of retail securities denominated in euros.

In 2017, around €2.409 billion in Hungaryʼs FX debt will mature, including €1.628 bln of international FX bonds and €147 million in domestic FX bonds. Hungary will also have to pay back €611 mln in loans to international financial institutions. Municipalities must repay a further €23 mln in FX loans.

Forint-denominated government debt is set to rise from HUF 18.286 trillion at the end of 2016 to HUF 20.258 tln at end-2017. The FX debt is expected to fall from HUF 6.701 tln to HUF 6.099 tln.

GDP, at current prices, is set to increase from HUF 35.194 tln in 2016 to HUF 37.279 tln in 2017, according to the bill.

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