Eurostat maintains reservations on Hungary’s budget deficit data

Eurostat maintains its reservations on the quality of data reported on the general government sector, Eurostat announced in the publication of the official 2016 budgetary data under the ESA methodology. As we have reported earlier, Eurostat recommended the Hungarian authorities to include state-owned Eximbank in the general government sector, which will result in an increase in the government debt. The Hungarian government actively opposed the recommendations and Eurostat’s announcement should mean that technical discussions on the issue continue. In addition, Eurostat said that it is in discussion for further expansion of the general government sector classification by including the operations of the NBH foundations, the national resolution fund, the deposit guarantee fund and the bad bank MARK as part of the general government. We think such expansion has the potential to further boost the government debt level, most likely the deficit as well due to some recent bailouts of brokerages and commercial bank MKB.

At this stage, Eurostat has accepted the data submitted by the statistical office (KSH) on the general government sector. The budget deficit was 1.8% of GDP in 2016, up by 0.2pps y/y. The general government debt stood at 74.1% of GDP at end-2016, down by 0.6pps y/y.

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