Hungary's public debt bounces back in Q1

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Hungary’s general government consolidated gross debt at nominal value was 74.6% of GDP at the end of the first quarter of 2017, down from 74.1% from the end of 2016, the central bank’s (MNB) preliminary financial accounts data showed on Wednesday. It is noteworthy regarding households that their financing capacity, i.e. the difference between their new liabilities and receivables, has been diminishing for several quarters now. It is also interesting that households’ currency and deposit stock decreased slightly in Q1, whereas their holdings of government securities increased markedly.
Hungary’s central bank (MNB) has published preliminary financial accounts data on Wednesday. The key information are the following:
  • General government net lending calculated from the financing side (HUF 230 billion) was equal to 2.8% of quarterly GDP in Q1. This corresponds to an immense improvement over HUF -877 bn in Q4, which is relating to the cabinet’s end-year spending spree.
  • According to preliminary data, general government net lending amounted to HUF -589 billion or -1.7% of GDP in the four quarters to 2017 Q1
  • At the end of Q1, general government consolidated gross debt at nominal value (or Maastricht debt) was equivalent to 74.6% of GDP (HUF 26,442 bn), slightly up from 74.1% at end-2016.
  • Net liabilities of general government amounted to HUF 22,665 billion or 64.0% of GDP at the end of March, vs. 65.9% at the end of December last year. The chart below also indicates the decline in net liabilities and the rise in gross debt.


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According to preliminary financial accounts data, net lending of households was equivalent to 4.3% (HUF 349 billion) of quarterly GDP in Q1, down from HUF 522 in Q416. This came to pass as follows, according to the central bank:
  • Within financial assets, households increased their savings (by HUF 234 bn) in government securities particularly strongly in the period. Here, demand for long-term paper was greatest (HUF 170 bn). .n addition, the stocks of quoted shares and other equity also rose due to transactions. The latter reflected the fact that part of owners of limited liability companies carried out the compulsory capital increases in the first quarter of the year.
  • Life insurance reserves continued to grow in the quarter, which primarily affected non-life insurance reserves. Households reduced their investments in a number of instruments in the period. Holdings of currency and deposits fell (by HUF 11 bn) due to transactions and there were net sales of bonds issued by credit institutions and of mutual fund shares. The termination of advances recorded earlier in relation to sales of land by the government reduced the stock of households’ other receivables
  • Outstanding borrowing by the household sector increased slightly in Q1. There continued to be net repayments of housing loans. The stocks of consumption loans and other loans increased more strongly due to transactions.
  • The chart below demonstrates how the financing capacity of the two sectors changed over the last few years, according to the central bank’s newly applied seasonal adjustment programme:


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  • According to preliminary financial accounts data, net lending of households was equivalent to 4.4% of GDP in the four quarters to Q1 2017. You can observe a descending trend here over the last year or so, which is related to a slow asset increase at households and their invigorating borrowing, i.e. it is in connection with increasing consumption.


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