Economy 1 October 2020, 9:08am

Hungary public debt did not take off but it's over 70% of GDP already

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Hungary's general government gross debt was "only" 70.3% in the second quarter of 2020, accoriding to financial accounts data published by the central bank (MNB) on Thursday, which shows a downward revision from the preliminary print of 71.9%. This means debt grew slightly less than previously expected, but it is still four percentage points higher than at the end of 2019.

General government consolidated gross debt at nominal value was 68.7% of GDP at the end of June (HUF 32,432 billion). Including the debt of Eximbank, the sector’s debt amounted to 70.3% of GDP (HUF 33,200 billion).

the data is surprising in that the preliminary release showed 71.9% of gdp debt for q2 and gdp contracted more than expected in april-june.

The MNB had calculated with smaller GDP at the preliminary financial accounts data release and this is what has led to a lower debt-to-GDP ratio now.

Net lending of non-financial corporations amounted to -1.0% of GDP (HUF -490 billion) in the four quarters to 2020 Q2. General government net lending was -4.7% of GDP (HUF -2,242 billion) in the period. Net lending of households amounted to 5.7% of GDP (HUF 2,708 billion) and net lending of the rest of the world was 0.1% of GDP (HUF 56 billion) in the four quarters to 2020 Q2.

General government net lending amounted to HUF -1,075 billion or -9.9% of quarterly GDP in Q2. Of the sub-sectors of general government, net lending of central government, local governments and the social security funds was HUF -679 billion, HUF -170 billion and HUF -225 billion, respectively.

At the end of 2020 Q2, the non-consolidated stocks of general government’s assets and liabilities amounted to 35.7% and 91.2%, respectively, of GDP. As a result, the sector’s net financial worth amounted to -55.6% of GDP. Within financial assets of general government, there was a significant increase in deposits with the MNB due to transactions. In addition, the stock of long-term loans rose modestly. However, a significant decline occurred in equities due to transactions, and other receivables also fell.

Within liabilities of general government, long-term securities rose sharply due to transactions, primarily as a result of purchases of government bonds made by the rest of the world, financial corporations and households. Short-term securities continued to fall significantly due to transactions, resulting from net sales by financial corporations and households. In addition, the stock of other liabilities, in particular tax liabilities and liabilities vis-à-vis the EU fell sharply.

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