Let’s have a look at the digits today:
Hungary - the debt grows and so the rating does
Latvia – only EUR 47.64 m revenue deficit
What’s up in indexes?
The ratio of gross government debt rose from 79.6% to 76.9% in the first half of 2015 – analysts from Hungarian central bank (MNB) reveal. But this is temporary and lower than expected in analysis published in June this year – MNB reassures.
In part it’s EU fault, because it delayed some transfers forcing Hungarian governments to cover costs of projects of approx HUF 450 bn. So the government needed to increase its financial reserves. The reserves rose by HUF 400 bn and it was financed by bond sales, resulting in growing debt.
The second cause of debt growth was purchasing the Budapest Bank and taking over the Budapest Public Transport Company (BKV). It increased the debt by HUF 247 bn.
Let us rememember that according to Maastricht criteria the debt-to-GDP ratio should not exceed the 60 % limit. If does, the country is obliged to introduce the „debt reduction benchmark rule”.
Moody’s – an international rating agency – reports it will consider upgrading Hungary’s rating if the government support sustained growth and reduce the government debt-to-GDP ratio.
The current Hungary’s rating is Ba1 with stable outlook. Moody’s experts say it “reflects its diversified and relatively resilient economy and its contained fiscal deficit, weighed against the government’s high debt level and the economy’s substantial refinancing needs”.
What do Moody’s expect from Hungary? 1) An average growth of the next three years of 2.3%, 2) Keeping the budget deficit below 3% of GDP, 3) Maintaining the declining trend (now growing – see above) of government debt-to-GDP ratio.
The “Credit Analysis: Hungary” report was released in London.
Latvia is so successful in collecting taxes. As the State Revenue Service reveals, it collected 99 % of planned annual budget revenue during the first 8 months of the year. The projected sum was EUR 4.982 bn. The result is EUR 4.935 bn.
Of course the largest contributor is the value added tax (VAT). It gave EUR 1.244 bn (the plan is EUR 1.287). The second is excise tax. The revenue from excise was EUR 516.94 million, more than EUR 503.927 planned. And in collecting a personal income tax they did more than 100%. The revenue amounted EUR 942.25 m and the projected sum was EUR 940.8 m.
Markets. What’s the second best index in Europe? BUX of Budapest
Polish “Parkiet” daily newspaper publishes the rank of the fastests growing market indexes in the world. The second best is BUX of Budapest. It has grown more than 28 % since the beginning of 2015. Inverstors appreciated the bank tax cut and good economy prospect of the country (with the sustained growth). Let us remember that last year BUX fell down 10 %. The other fast-growers from Europe are: SAX Bratislava (Slovakia) and OMX Tallin (Estonia).
Of course, the fastests growing indexes in the world are those of stock exchanges of the emerging countries. So the first place is IBC of Venezuela’s Caracas Stock Exchange (that raised 288%) and the third place is Merval of Argentine (up 28% from the beginning of 2015).
What’s up in indexes?
The fastest growing of Europe BUX index (of the Budapest Stock Exchange) was down 1.05% on Firday, September 1. It was 21083.05 index points while on Thursday, September 10 it was 21306.51. But it is still up 26.75% from year-end.
BET (of Romania) finished down 0.33 % with 7136.69 index points. On Thursday it was 7160.25 index points. It is up 0.76% from year-end.
PX (of Czech Republic) fell down slightly on Friday to 1001.18 index points. The previous result was 1002.71 (so it’s down 0.15%). But from year-end it’s up 5.75%.
Polish WIG20 on plus. It was up 0.02% on Friday with 2185.46 index points (on Thursday it was 2184.96). From year-end it dropped 5.63%.
Bulgarian SOFIX grows. The result on Friday was 451.87 index points while on Thursday it was 450.72 (up 0/26%). But from year-end it is down 13.45%.
OMX Tallinn increased 0.4-% on Friday with 882.67 index points. The day before it was 879.17. It is up 16.90% from year-end.
OMXV (Vilnius) was up 0.23% on Friday (487.41 index points compared to 487.31 index points on Thursday). It is up 7.73% from year-end.
SAX (of Bratislava Stock Exchange) grows rapidly. It increased to 265.82 index points on Friday. That is up 2.77% day to day. And up 19.57 from the year-end.
UX (Ukraine) fell 0.35% on Friday with 988.61 index points. On Thursday it was 992.10. It’s 0.35 % fall from year-end.