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

Author

Listed:
  • Gergely Kicsák

    (Magyar Nemzeti Bank)

  • Dávid Benkõ

    (Magyar Nemzeti Bank)

  • Noémi Végh

    (Magyar Nemzeti Bank)

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.

Suggested Citation

  • Gergely Kicsák & Dávid Benkõ & Noémi Végh, 2020. "Interest Savings of the Hungarian Budget between 2013 and 2019 in Comparison with Other EU Countries," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 19(4), pages 5-26.
    • Handle: RePEc:mnb:finrev:v:19:y:2020:i:4:p:5-26
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    general government; interest expenditure; monetary policy;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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