Despite its pledges, Hungary failed to make any reduction in its debt in 2014, with the ratio of 77.3% of GDP at the end of last year the same level at which it finished 2013, preliminary data from the central bank showed on February 17. That puts the country at risk of dropping back into the EU's excessive deficit procedure.

In nominal terms, Hungary's debt rose in 2014. Consolidated gross debt stood at HUF24.52tn (€80bn) at the end of last year, up from HUF23.1tn 12 months previously. On a quarterly basis, however, the debt shrank from HUF25.1bn in Q3, when it accounted for 80.3% of the GDP.

The European Commission warned Hungary in December that it risked breaching EU rules as the pace of debt reduction may be too slow. Hungary has the highest public debt in Central Europe and the government is seeking to cut it to 75.4% of economic output by end-2015.

Hungary has struggled to pull its debt in for the past three years. Under EU debt reduction rules, member states whose debt-to-GDP ratio exceeds 60% must reduce the excess debt by 5% per year on average over three years. Brussels warned Hungary in December that failure to drop its state debt could push the country put back under the EU's excessive deficit procedure by the spring.

However, some suggest the prospects for lowering the debt ratio this year could be more promising than in 2014 thanks to economic growth. Analysts at Portfolio.hu estimate that if nominal GDP growth reaches 3.5%, the debt-to-GDP ratio will drop, albeit within narrow limits.

They also note that the drop in 2013 from just below 79% of GDP was achieved via one off "tricks". A stagnant reading in 2014, without any sleight of hand, suggests a genuine drop in gross debt. 

However, just how much help economic growth can offer is dubious. While GDP expansion came in at 3.5% in 2014, the vast majority of analysts forecast a sharp deceleration to around 2% this year. A stable forint will also be needed to drop the ratio, the analysts note.