Hospital arrears amounted to HUF 35bn at the end of H1, the news portal Napi reported citing data by the Treasury. Arrears increased by HUF 1.4bn m/m in June, which was lower than the usual increase but we think it does not signify yet improved financial management of the sector. As we reported, the government assumed and repaid HUF 45bn of hospital arrears in late 2017 so the sector’s arrears were reduced to HUF 15bn in the start of the year. Arrears therefore rose by HUF 20bn in H1, representing an average monthly growth of HUF 3.3bn. Maintaining this pace of increase will mean that hospital arrears will accumulate to a generally similar amount as last year and will require a similar amount of government bail-out as last year, in our view.
The structure of the hospital arrears reflected deteriorating willingness to pay, the portal commented. Some 40% of the arrears were due for more than two months as of end-H1 compared to a 20% share in the beginning of the year, it pointed out.