Hungary Debt Ratio Reaches 85.1 pc of GDP
Budapest, August 18 (MTI) – Hungary’s public debt, calculated at nominal value, in line with Maastricht methodology, reached 25,432 billion forints (EUR 81.2bn), or 85.1 percent of GDP, at the end of June, preliminary data on financial accounts published by the National Bank of Hungary (NBH) today show.
Transactions raised the debt by 434 billion forints during the period. The weaker forint boosted it by 65 billion forints.
The debt ratio rose from 84.4 percent at the end of March and 79.4 percent at the end of 2013.
The opposition E-PM said the figures showed that Prime Minister Viktor Orban and central bank governor Gyorgy Matolcsy, formerly economy minister, have lost the war against public debt which is now near twenty-year record high. E-PM said the figures published on Monday did not include the thousands of billions of forints transferred to state coffers from the private pension funds and a Russian loan taken out for the expansion of the Paks nuclear power station. If these items were also added, then the public debt would exceed 100 percent of GDP, the party added in a statement.
The leftist Democratic Coalition (DK) said that the government has “lost another battle” in its war against the public debt. Laszlo Varju, who sits as an independent deputy, said in a statement that though the government had “applied a series of fiscal tricks” and reduced the debt below 80 percent of GDP last year, it grew again by as much as 5 percentage points in the first quarter, and the budget deficit exceeded 4 percent of GDP in the second. He warned that the tendency could lead to another excessive deficit procedure by the European Union.
According to radical nationalist Jobbik, the government has failed in its attempts “involving a multitude of austerity measures” and concluded that the government should start without delay negotiations about rescheduling the national debt.
Jobbik’s deputy group leader Janos Volner told a press conference that Hungary’s debt continued to grow, while the government “restricted the economy, impoverished the people, and ruined the country’s competitiveness”. He also noted that at the beginning of the previous cycle, the government had pledged to reduce the debt to 65-70 percent of GDP by 2014.
The opposition Socialist Party called on the government to abandon the idea of using a 10-billion-euro loan from Russia to upgrade the Paks plant and take steps to strengthen the ailing Hungarian currency.
Sandor Burany, the Socialist head of parliament’s budget committee, called the recent increase in the public debt “brutal”, and urged the governor of the National Bank to stop “all unnecessary luxury acquisitions” such as the recent purchase of a manor near the river Tisza or a lavish fin-de-siecle office building in central Budapest.
Burany said it was clear that the government is to blame for the record high debt and insisted that the “deliberately weakened” forint and the government’s “unpredictable” economic policy were weighing heavily on Hungarian families.
The green opposition LMP called on the government to meet its earlier pledge to reduce the national debt. LMP deputy Erzsebet Schmuck, deputy chair of parliament’s budget committee, said that putting the state debt on a downward path would require dropping “luxury development projects”, with special regard to the Paks upgrade or the central bank’s purchases.
Responding to opposition criticism, the ruling Fidesz party said that it was the parties of the left that had doubled Hungary’s national debt. In a statement sent to MTI, Fidesz insisted that under the previous, Socialist governments the country was “up to the eyes” in debt, the national debt rising from 8,300 billion forints to 22,000 billion, or from 53 percent of GDP to 85 percent.
The previous governments had “ruined the country and made it vulnerable through their perilous and extreme economic policies,” the statement said.
The country is fiscally stable and the economy has been put back on a long-term growth path, while employment is record high, the document added.
Source: http://mtva.hu/hu/hungary-matters