The Hungarian government's net borrowing stood at HUF 115bn (EUR 388.2mn) in Q2 2013 equalling to 1.6% of the quarterly GDP, the central bank said, revising down the initial estimate of HUF 220.7bn. In cumulative terms, net borrowing amounted to HUF 659bn, or 2.3% of the GDP in the four quarters to Q2 2013.

The central government had a net financing requirement of HUF 772bn in Q2. On the assets side, other receivables from companies and non-residents rose significantly, while the stock of short-term loans fell markedly. On the liabilities side, the stocks of long-term securities and loans of central government increased significantly, mainly reflecting the assumption of debt from local government authorities in the second quarter. In addition, the sector issued a large volume of government debt securities in the observed period.

The local governments had a positive balance, as net lending stood at HUF 568bn. The sector’s liabilities in long-term securities and loans fell significantly due to the assumption of local authority debt by the central government. Similarly, the social security funds had a net lending of HUF 89bn in Q2 2013.

Hungary’s consolidated gross debt at nominal value, or the so-called Maastricht debt, stood at HUF 23,249bn, accounting for 81.1% of the GDP at end-June 2013, down from 82.3% at end-March 2013.

Meanwhile, from non-financial point of view, Hungary’s general government deficit stood at HUF 116.9bn in Q2, or 1.6% of GDP, the statistics office said. The gap was 6.7% higher compared to the same period a year earlier with both expenditures and revenues growing by 6.9% y/y in Q2.

Among expenditure items, government’s public investment rose by a strong 37.3% y/y, interests payment advanced by 9.8% y/y and the compensation of employees increased by 6.7% y/y. In addition the social benefits ,other than social transfers in kind and intermediate consumption increased by 4.4% y/y and 4.2% y/y, respectively.

The growth in revenues was primary due to a 8.9% y/y rise in revenues from indirect taxes, within which VAT payments grew by 8.2% y/y. Revenues from taxes on income were up by 6.1% on the year and social contributions advanced by 3.2% y/y as well.

Hungary's general government sector ran a deficit of HUF 598.1bn in 2012, accounting for 2.1% of the GDP. The government targets an ESA95 deficit of 2.7% of GDP in 2013.