Eurostat: Hungary’s Eximbank is not a bank

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Eurostat, the EU statistics office, refutes the claim by the head of the Hungarian Central Statistical Office (KSH) that Eximbank operates as an independent financial intermediary, in an official exchange posted online today. At issue is whether a deficit at Eximbank should translate as a deficit in the Hungarian state budget.

Reclassifying Eximbank as operating inside the general government would result in an increase in debts owed by the state, impacting the governmentʼs report on state debt. The Hungarian government says Eximbank is a separate, non-government entity, but Eurostat disagrees.

Eurostat first said it was inaccurate to exclude Eximbank (Hungarian Export-Import Bank Plc) from the government sector in response to Hungaryʼs Excessive Deficit Procedure (EDP) report earlier this year.

In Eurostatʼs latest response, sent in reply to a March 31 letter from KSH President Gabriella Vukovich, the EC organization says that calling the institution a bank is not enough to make it a non-governmental business: “The fact that a unit is called ‘bank’ is not relevant; the decisive factor is whether or not the unit is a deposit-taking corporation. Given that Eximbank does not take deposits it cannot be classified in S.122”.

The letter from Eurostat goes on to say that Vukovich’s argument that Eximbank performs financial intermediation and therefore assumes market activities given that financial intermediation is automatically considered a market activity in national accounts, is not an accurate argument. 

“It is not correct that in national accounts any activity which has the characteristics of financial intermediation is automatically considered as a market activity. It cannot be excluded that an activity having the characteristics of financial intermediation is performed on non-market terms. Even assuming that financial intermediation was defined as a market activity in national accounts, Eximbankʼs production, as shown in our letter of 21 March 2016, is most likely negative in national accounts terms. This would lead to an obvious contradiction of negative market output,” Eurostat said.

KSH said in their March 31 letter that Eurostatʼs decision to reclassify Eximbank was not in line with the EUʼs recently adopted ESA2010 rules on national accounts “which spreads uncertainty in the statistical methodology and disrupts the harmony between the statistics of national accounts”.

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