Government debt had fallen significantly since the start of the year.Continue reading
This year marks the focus on strengthening economic growth, and that the budget situation remains stable, according to Finance Minister Mihály Varga at a press conference.
The state budget in 2023 outperformed 2022, and further improvement is anticipated this year. In 2022, the balance worsened significantly due to the Ukrainian war and the energy crisis, but last year saw improved indicators. The 2023 budget included a substantial amount of EU projects, totaling HUF 650 billion (EUR 1.7B).
The positive change in economic trends is reflected in the fact that the cash deficit narrowed to HUF 4.59 trillion (EUR 12.1B), even with increased pension subsidies and higher defense expenses. The government debt-to-GDP ratio continued to fall, reaching 73.9 percent at the end of 2022, declining further last year.
Sixteen EU countries, including Hungary, succeeded in reducing this indicator.
In the last 10 days, HUF 470 billion (EUR 1.2B) of EU funds were accounted for, with EU payments continuing to flow in. Hungary maintains a strong position with reserves exceeding HUF 1,200 billion (EUR 3.1B). With economic growth rebounding last year, the government is working to improve balance indicators and reduce public debt and public deficit.
On another successful dollar bond issue on Wednesday, a 12-year dollar bond worth USD 2.5B was issued, with investors bidding for USD 5.6B. The significant interest underscores confidence in the Hungarian economy.
The issuance ensures the country’s debt financing has a solid foundation, with Hungary in the recommended for investment category of all three major international credit rating agencies, reflecting confidence in the Hungarian economy. The minister highlighted that ten years ago, half of the debt was foreign-owned, but now the proportion has fallen to a quarter.
According to the minister, no changes in the financing plan are expected during the next five to six months.
Responding to a question, he confirmed that according to the government’s calculations, the GDP could grow by around 3.6 percent this year. He also indicated that the 2024 budget figures are set, with a deficit target of 2.9 percent of GDP, stating, “we have to keep this.”
When asked about the Hungarian National Bank (MNB), he said that the ministry has always respected the central bank’s operations and that recent interest rate decisions have boosted confidence in the economy. The central bank is doing its job, helping to bring inflation down as soon as possible. He reported that Budapest had received a subsidy of HUF 10 billion (EUR 26.4M) for public transport for 2023.
Via MTI; Featured Image: MTI / Balogh Zoltán
