Interest Savings of the Hungarian Budget between 2013 and 2019 in Comparison with Other EU Countries

Gergely Kicsák (), Dávid Benkõ () and Noémi Végh ()
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Gergely Kicsák: Magyar Nemzeti Bank
Dávid Benkõ: Magyar Nemzeti Bank
Noémi Végh: Magyar Nemzeti Bank

Financial and Economic Review, 2020, vol. 19, issue 4, 5-26

Abstract: This paper compares the decline in government interest expenditure in Hungary and other Member States of the European Union. Government interest expenditure decreased across the whole EU between 2013 and 2019, and the second largest drop was recorded in Hungary, with government interest payments diminishing from 4.5 per cent of GDP to 2.3 per cent. To understand the cause of this development, favourable even by EU standards, the change in interest expenditure was divided into three main factors: the yield and interest effect, the impact of the change in the debt ratio and the influence of foreign currency debt. The analysis showed that the decrease in Hungarian expenditures can be attributed mostly – by about 80 per cent – to declining domestic yields, while the fall in the debt ratio had a somewhat lesser effect – around 18 per cent. Had foreign currency debt levels been lower, Hungary’s interest expenditure would have shrunk even more.

Keywords: general government; interest expenditure; monetary policy (search for similar items in EconPapers)
JEL-codes: E42 H50 H62 H63 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:mnb:finrev:v:19:y:2020:i:4:p:5-26

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