Commentary V4

Hungarian public debt drops to 11-year low

Hungarian public debt dropped well below 70 percent of gross domestic product by the end of the second quarter, representing an eleven-year record, conservative daily Magyar Nemzet reports.

At the end of Q2, the consolidated public debt of Hungary stood at 67 percent – or 68.7 percent including the debt of state-owned Eximbank, which also counts towards public debt in line with the European Union’s accounting methods.

Hungarian public debt peaked in 2011, after the country took out a US$15.7 billion loan from the International Monetary Fund to help the economy weather the effects of the global financial crisis. The conservative government which came into power at the 2010 general elections made it one of its priorities to repay the debt which it said was exerting “undue foreign influence” on economic policies.

The loan was eventually paid in full in 2013, ahead of schedule.

At the end of the second quarter net public debt – which also takes into account gold and foreign currency reserves as well as any financial receivables – also fell to 54.9 percent or a ten-year low.

Economist Imre Boros said that with public debt already below 70 percent of GDP and forecasted to drop further to 67 percent by the end of the year and 63.2 percent by the end of 2020, one of the key Maastricht criteria of joining the Eurozone (public debt below 60 percent) is now within sight.

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