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Mar 01, 2016

Hungary Among the EU Countries Most Effective in Reducing State Debt

The policy of reducing state debt is essential for bolstering economic growth, continuing job creation and the improvement of families’ positions, Minister for National Economy Mihály Varga said at a conference on state debt, organized by Hungarian think-tank Századvég in Budapest. Since 2010, Hungary has achieved the largest reduction of state debt, 8.2 percent, and we are the only country with an intact downward trend concerning the general government debt-to-GDP ratio.

Thanks to a consistent economic policy, the Hungarian Government has managed to reduce the government debt-to-GDP ratio to 11 percent below the EU average, Mihály Varga pointed out.

In his presentation on developments of the past six years, the Minister noted that prior to 2010 both the country’s external debt and government debt levels had been on the rise which became an obstacle to growth and led to significant risk exposure. In this environment, the Government had to simultaneously balance the budget, reduce the stock of debt and implement long-overdue reforms to ignite economic growth, the Minister said. Nowadays, results are convincing when one looks at the pace of economic growth, the number of economically active people or changes in fiscal debt and state debt data, he added. “We had started as tail-enders and managed to join a small group of EU member states which were capable of reducing their debt,” he said. The fact that the Government had pulled through the debt consolidation of local governments and solved the issue of forex loans highlights the achievement of the Hungarian economy.

Mihály Varga stated that the holdings of government securities of domestic retail investors were crucial in fostering positive changes in financing state debt in Hungary. The fact that the stock of government securities held by retail investors has steadily increased over the past four years signals the success of a new programme launched in 2012.

By the end of last year, he stressed, international institutions and market analysts have come to appreciate the strong economic balances and the status of the real economy in Hungary. The former harsh critics have turned positive on the performance of the Hungarian economy, our fiscal policy and debt management, Mihály Varga stated.

The Government is committed to come to a zero-deficit state budget, because that the way to secure the steady reduction of state debt in the long term, he said.