Hungary's reserves at 9-month high

The balance of the central government's account at the National Bank of Hungary rose HUF 792.2 billion to HUF 1,787.4 billion month-on-month at the end of March, the cental bank reported. This is the highest balance since the end of June 2013. The sudden increase is due to a USD 3 billion government bond issue in late March; more specifically, due to the fact that the NBH has already exchanged the USD amount resulting from the bond issue into local currency for the state, and the forint funds have been deposited in government accounts at the central bank. As the objective of the USD bond issue was to enable the state to meet future foreign currency debt service obligations, the fact that the revenue has been converted into forints is somewhat surprising.Hungary needs to have funds ready in May when a GBP 500 million bond is maturing, as well as in late July when repayment of a EUR 1 billion tranche of eurobonds is due. Further, in Q4 2014 Hungary will need to repay EUR 2 billion borrowed from the European Commission during the subprime crisis in 2008 and 2009.

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