Hungary’s economic situation and the change in state debt is favourable even when compared to other European countries, Minister of State for Public Finances Péter Benő Banai told public news channel M1.

As he pointed out, the general government debt-to-GDP ratio depends on economic performance and fiscal management. Respective Hungarian data from the past two years show positive trends in both aspects, even from a European perspective.

The deficit of the central government budget had been below 3 percent of GDP for years, and it was around 2 percent last year. Economic growth and prudent fiscal policy have been instrumental in reducing the debt ratio in every single year since 2011, which hit 75.5 percent last year.

The Minister of State added that Euro-bonds valued at several billions of forints will be redeemed this year, due to European Commission liabilities. He stressed that the Government is aiming to finance state debt more and more through forint bonds instead of forex bonds. Those who have ever had a forex loan know the difference, he said. In 2015, the share of forex debt fell roughly in proportion to the increase of holdings of forint debt by residents. This also means that returns on the securities, which are paid by the state, enrich Hungarian families instead of flowing out of the country, he emphasised.

Responding to questions on a potential zero-deficit budget Péter Benő Banai said that in recent years the primary budget, which excludes interest payments, have been in the green. In other words, the budget would already post a surplus without state debt. Naturally, it is impossible to do away with all debt from one year to another, but reaching a zero-deficit budget is the right step in this direction.

(Ministry for National Economy)