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Finance Minister: Global Economic Downturn More Severe This Year than in 2008

MTI-Hungary Today 2020.12.15.

The management of Hungary’s public debt is stable and based on several pillars, Mihály Varga, the finance minister, said in a YouTube video on Monday.

Next year does not harbour any notable risks, and major reserves are at hand just in case, he said.

The government’s principles for how to manage debt followed so far will be adhered to in the future too. He added that the ratio of FX debt to the total is falling, and more and more domestic investors are involved in state financing.

The net financing requirement next year is expected to amount to 3,332 billion forints, and half of this is planned to be raised on the forint bond market. Also, a new 30-year green forint bond issue is planned.

Varga said the global economic downturn was more severe this year than in 2008. He noted the government had to provide immediate job and business support and recovery aid, all of this amounting to around 28 percent of GDP.

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The Hungarian economy was in much better shape to withstand the current calamity than it was during the 2008 financial crisis, he said, adding that crisis management was covered by the country’s own resources.

The public debt, he noted, has shrunk in recent years, from 80 percent of GDP in 2010 to 65.4 percent by the end of last year. And external debt was reduced from 56 percent of GDP in 2010 to 34 percent by the end of 2019.

At the same time, the public finances have remained stable and Hungary’s international financial standing has improved, Varga said.

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The economy is likely to contract by 6.4 percent this year, while a budget deficit of around 9 percent of GDP is anticipated. Whereas the public debt level will again rise to around 80 percent, it will still be well below that of many other countries hit by the crisis, he added. The aim remains to reduce the budget deficit and debt in the next few years, the minister said.

Featured photo by Szilárd Koszticsák/MTI