The government expects a huge general government deficit of 6.5 percent of GDP next year. Of this, 700 billion will be covered by the issuance of foreign currency bonds at the end of this year, 1 billion will be provided by purchases of retail government securities and 1.6 billion by other investors.

Mihály Varga, Minister of Finance, and Zoltán Kurali, Director General of the Public Debt Management Center (ÁKK), presented ÁKK’s financing plan for 2021, that is, exactly what sources are planned to finance the huge deficit of finances public.

By the way, the Finance Ministry now expects the deficit target to be 6.5 percent of gross domestic product (GDP), this was announced in a statement on the November budget balance.

This year is worse than expected

Unfortunately, the whole year was dominated by the pandemic, the economic recession was greater than during the financial crisis of 2008 – Mihály Varga started the briefing according to the Portfolio.hu report.

The government now expects GDP to fall 6.4 percent this year and the deficit to be around 9 percent of GDP. Our debt-to-GDP ratio is expected to rise to 80 percent in parallel.

With the previous figures, Mihály Varga has once again worsen the government’s forecasts, so far it has been an annual deficit close to 9 percent and a public debt close to 80 percent.

The deficit will also be large next year

In 2021, the net financing need is expected to be HUF 3.332 billion, which will be provided from two sources:

  • About half of the forint bond market, with more frequent swap auctions and the issuance of a new 30-year green forint bond, are also planned.
  • Significant resources would be obtained from the retail market, mainly based on the success of MÁP +.

The net financing need for the budget in 2021 is HUF 3,332 billion, which is financed by the net issuance of HUF 1,913 billion of government securities and the decrease in liquidity reserves formed in 2020, as well as the issuance of bonds in foreign currency in November 2020, you write ÁKK in your ad.

According to Zoltán Kurali, the 3332 million HUF will be composed in more detail:

  • This year’s reserves may amount to 732 billion, including 687 billion from this year’s use of currency issues,
  • The population increase can be 1,000 trillion HUF,
  • The forint bond market can finance 1.6 billion HUF.

It will not be necessary to issue foreign currency bonds in 2021 due to the pre-financing implemented in November 2020, which will be used by ÁKK to repay foreign currency bonds maturing in 2021. In addition to the foreign currency project loans planned for next year (for example, EIB, SURE), other foreign currency debt issues that support debt management purposes (for example, P € MÁP) and the possible buyback of short-term, high-interest foreign currency bonds , the foreign currency debt ratio will decrease in 2021.

The government expects GDP growth of 3.5 percent by 2021. If the recession is 6.4 percent this year, it means that the Hungarian economy will not reach the 2019 level again in 2022 at the earliest, that is , the recovery will be prolonged.



The number of independent power editorial boards is steadily declining, and those that still exist are trying to stay afloat in a growing headwind. At HVG we persevere, we do not give in to pressure and we bring national and international news every day.

That is why we ask you, our readers, to stand by us, support us, join our membership and renew it!

And we promise to keep doing our best for you in all circumstances!

The government has admitted that the budget deficit will also pass in 2021



Gábor Kovács
Economy

In one month, a deficit of HUF 700 billion was accumulated in the central budget and, by the end of November, the total deficit was over HUF 3 billion. The government’s budget deficit for 2021 has risen to 6.5 percent of GDP from 2.9 percent approved by law.

The budget deficit increased by 334 billion in October



MTI
Economy

Only segregated public funds were able to record all surpluses in the first ten months of the year. Due to the coronavirus, the state bought medical devices for almost 600 billion guilders.