Portentous data arrives on Hungary's sovereign debt

Several important reports revealing the state of public finances this year were also published on Wednesday. The government sector's balance sheet data painted a favourable picture of the budget situation, meaning that the flow indicators are in order. However, the situation is different when it comes to public debt, which points to a deterioration in stock data.

According to central bank statistics, gross debt as a percentage of GDP rose to 76.2% by the end of the second quarter, representing a 0.7 percentage point increase compared to the same period a year earlier.

The debt-to-GDp ratio is thus at a three-year high.

A new government forecast has also been released regarding public debt. According to the EDP report, the debt-to-GDP ratio could reach 73.1% by the end of this year, which means that the government has revised its debt forecast upwardly from the previous estimate of 72.6%.

At the same time, this also means that after the debt ratio rose to 73.5% at the end of last year, the government will be able to moderately reduce public debt by the end of this year.

This obviously correlates with the fact that the government has raised its deficit target for 2025 from the original 3.7% to 4.3% by now, as well as with another important factor, namely that the gross domestic product may amount to HUF 87,110 billion instead of the previously expected HUF 87,954 billion.

Nominally, the gross public debt of the government sector could reach HUF 63,678 billion by the end of this year, up from HUF 59,879 billion last year.

However, there are also some positive developments in the EDP report: interest expenses are expected to fall from last year's HUF 3,970 billion to HUF 3,402 billion this year.

Cover photo (for illustration purposes only): Getty Images