Economy 13 December 2021, 2:05pm

Hungary burning reserves like there is no tomorrow

Portfolio

The stock of the Single Treasury Account (kesz) decreased by nearly HUF 1,000 billion in November 2021, according to the latest balance sheet statistics released by the central bank (MNB) on Monday. This means that the HUF 1,500 billion of funds from the September FX bond issuance has almost completely disappeared in two months.

Deposits of the central government at the MNB amounted to HUF 2,895.6 billion at the end of November, which shows a contraction of HUF 960.7 billion over the end of October, the central bank's preliminary statistical balance sheet showed on Monday. The government's liquid reserves decreased by more than HUF 600 billion in October, which means that

the proceeds from the eurobond issue in september were spent in only two months.

The data is not such a surprise, given that the Finance Ministry announced last week that the budget incurred a deficit of over HUF 1 trillion in November.

In view of the massive erosion of government reserves, the cabinet's announcement last week of suspending HUF 350 billion worth of investment projects is seen in a new light. The current stock of the government's ready cash reserves is still higher than in the previous years, but it will be further reduced by the personal income tax refund in early 2022, the full payment of the 13th-month pension, and further fiscal measures already brougth to light.

Last week, the Finance Ministry reported a HUF 1,009 billion budget shortfall for November, which propelled the accumulated deficit since 1 January to over HUF 3.9 trillion. It is close to the full-year deficit target that was more than doubled (to over HUF 4 trillion) from the original goal (HUF 1.5 trillion) during the year.

The Nov gap stands out not only for the month, though. It is the second-largest monthly deficit in Hungary ever. The highest was incurred in December 2020 at HUF 2,250 bn.