Eurostat says the National Bank of Hungary’s (NBH) foundations should be included in the national budget.
The European Union’s statistics office said in a release on Monday that it had reservations concerning the quality of data in connection with the foundations as well as how they are classified.
“Eurostat considers that these foundations, including their subsidiaries, should be classified inside general government.”
“[F]or the purposes of statistical classification under ESA, the foundations are government controlled non-profit units and non-market producers and should … be classified in the general government sector,” Eurostat acting director Luca Ascoli wrote to the head of Hungary’s Central Statistical Office (KSH).
“Likewise, subsidiaries established or later acquired by the foundations are deemed to be artificial subsidiaries and should, therefore, be consolidated with their immediate parent(s),” Ascoli added in the letter dated April 16, 2018.
Assets of the NBH’s Pallas Athéné Foundations came to 269.8 billion forints (EUR 871m) at the end of March, the foundations’ assets manager said earlier.
The assets included 95.8 billion forints in real estate, 62.3 billion in investment fund units, 56.1 billion in corporate bonds, 30.2 billion in bank deposits and 25.3 billion in government securities.
The foundations have scaled back their holdings of government securities since 2016 after the European Central Bank warned that
the portfolio “could be perceived as being potentially in conflict with the monetary financing prohibition”.
Eurostat also said on Monday that it was withdrawing a reservation on the accounting of Magyar Eximbank after it had been reclassified as part of the general government.
Hungary’s budget deficit as a percentage of GDP rose to 2 percent in 2017 from 1.7 percent in 2016, according to Eurostat data. The public debt as a percentage of GDP fell to 73.6 percent from 76 percent during the same period.
The figures are the same as preliminary ones in Hungary’s Excessive Deficit Procedure report submitted to Eurostat on April 4.