Orbán on Monday: Public debt has not grown, Eurostat on Wednesday: Yes, it has

According to data published by Eurostat on Wednesday, Hungary's public debt relative to its gross domestic product (GDP) increased by 0.2 percent in the third quarter of 2024 compared to the previous quarter and by 1.3 percent compared to the year before. In the EU, the average for the former was 0.1 percent and for the latter 0.2 percent. Hungarian public debt is now 76 percent of the GDP (more than 60,610 billion forints), which remains below the EU average of 81.6 percent.

Speaking at a conference on the Hungarian presidency of the EU Council of Ministers on Monday, when listing the government's achievements at home, Prime Minister Viktor Orbán cited low overheads, the doubling of family tax benefits and pension increases. He noted that all this had been achieved while reducing the budget deficit and keeping public debt from increasing. As for public debt, Minister of Economy Márton Nagy recently admitted that it grew last year. It was precisely due to the high deficit – which would have to be curbed to reduce the debt unless the economy picks up significantly – that Hungary was one of the countries against which the EU launched the Excessive Deficit Procedure during the Hungarian EU presidency.

Along with data on public debt, Eurostat has also released the latest data on the deficit-to-GDP ratio, with Hungary's at 4.8 percent in the third quarter of 2024. The EU average is 2.9 percent, but several other countries have a bigger gap in their budget than Hungary, which ranks 20th out of 26 countries (no figures were received from Italy). Indeed, the Hungarian deficit has been consistently decreasing: it went from 5.5 per cent in the first quarter to 5.1 per cent in the second. In April, the government raised the deficit target for 2024 to 4.5 percent from the originally planned 2.9 percent, so this would require an improvement of almost 0.3 percent in the fourth quarter.

The Excessive Deficit Procedure, which had been temporarily suspended because of the coronavirus epidemic, was launched against seven countries last year and continued for one, given that EU regulations require the deficit to be kept below three percent and the debt below 60 percent. The Council of Ministers also issued recommendations for reducing the deficit on Tuesday. These are based on the medium-term budgetary plans that each member state must submit to the European Commission. The first to evaluate the documents is the EU's quasi-government, before forwarding them to the Council for approval.

The Council issued recommendations for seven out of the eight countries with excessive deficits on Tuesday, with Hungary being the only exception. This is because Hungary's medium-term budget plan has not yet been approved by the ministers, but this is likely just a matter of time. The submission and evaluation of Hungary's plan was also delayed last year (officially, in consultation with the European Commission, but according to a leaked letter, the body was at first dissatisfied with the government's methodology and said the document lacked some information) and the plan was eventually amended. It was just a week ago that the European Commission proposed to the finance ministers of the member states that they adopt the documents on Hungary, which they are expected to do at the next meeting of finance ministers in February.