According to data of the National Bank of Hungary, the central government debt-to-GDP ratio was 77.3 percent at the end of 2014, which figure is on a par with that of the end of 2013. Final GDP data at current prices are to be published by the Hungarian Central Statistical Office (KSH) in March 2015. Therefore, final debt statistics will also be made public only later, on 31 March by the National Bank of Hungary.

The Government has put an end to a rising debt level: while the debt-to-GDP ratio increased from 55.1 percent in 2002 to 80.9 percent in 2010, constituting average annual growth of 3.2 percentage points, it edged lower over the past four years to 77.3 percent, by 3.6 percentage points. Growth-oriented economic and consistently prudent fiscal policies have been pivotal for this achievement and without these the debt ratio would have increased far higher.

The Government has implemented several measures to lower debt: budget deficit has been kept below 3 percent of GPD since 2011 and the stability-focused monetary policy has managed to cut debt refinancing costs. The fact that EDP against Hungary was lifted in June 2013, after nine years, is an unquestionable achievement of Hungarian economic policy.

The international economic environment has not facilitated the lowering of debt at the end of 2014. Along with fiscal balance and economic growth, the third factor that significantly influenced the debt rate was the unfavourable change in forint exchange rate. As a consequence of international events, such as the Russia-Ukraine conflict, forint depreciated sharply in the last weeks of 2014, and the 18-forint gap compared to the exchange rate of 31 December 2013 alone caused an increase of 2 percentage points within the debt ratio.

The steadily decreasing share of foreign currency denominated debt has been a positive trend, as state debt and forex risks are both diminishing. This year, Hungary will not issue forex bonds on international markets and expiring securities are set to be financed by forint bonds. As a result, the share of forex debt is expected to continue to fall. The share of domestic bondholders (households and institutions) increased from 46 percent in 2013 to 48 percent, within which the share of households edged up to 10 percent. As a sign of increasing investor confidence, since 2010 yields on short-dated securities dropped from above 5 percent to 1.6 percent and that of long-dated ones fell from 7 percent to about 3 percent.

(Ministry for National Economy)