State debt-to-GDP ratio continued to decline

As a result of the Government’s fiscal policy, the downward trend in the general government debt-to-GDP ratio of recent years has continued, and thus the indicator fell to 73.6 percent while the budget balance finally showed as expected a deficit of 2 percent of GDP, Minister for National Economy Mihály Varga said, commenting on data published by the KSH for the spring EDP Report.

Fiscal policy in recent years has been characterized by steady decline in the debt ratio and stable public finances, Mihály Varga stated. In 2010, when the new government came to power, they faced a high and growing debt ratio of 83 percent of GDP while in 2017 the downward trend continued. Last year, the debt ratio – including Eximbank receivables — fell from 76 percent in 2016 to 73.6 percent in 2017 (or from 73.9 percent to 71.7 percent according to the former methodology). This shows that the ratio has been lowered despite the fact that upon the request of the Eurostat the Hungarian Central Statistical Office had included Eximbank in state debt. On the other hand, the standpoint of the Ministry has remained unchanged, the Minister stressed: the Eximbank cannot be regarded as a debit item in national accounts.

Speaking of the state deficit, the Minister said a deficit-to-GDP ratio of 2.4 percent had been projected for the year 2017 and this finally came to 2 percent for 2017 and 1.7 percent for 2016, in line with Government expectations. These figures fit well into the series of deficit ratios of recent years: after the EDP against Hungary, which had begun in 2004 under the Socialist-Liberal government, was lifted in 2013 the deficit ratio has been kept below 3 percent of GDP and this has ensured stable and predictable public finances and investment environment, Mihály Varga pointed out.

In comparison to 2010, the minimum wage has practically doubled, rising from HUF 73 500 to HUF 138 000, and the guaranteed minimum wage went up from HUF 89 500 to HUF 180 500 in 2018. Under the current government, the number of people in employment has risen by 750 000, and the unemployment rate fell from 11.8 percent in 2010 to 3.8 percent. The Hungarian economy has also switched into a higher gear, hitting GDP growth of 4.2 percent last year.

Source: kormany.hu