Hungary Has Highest Borrowing Need in East Europe, Moody’s Says

Hungary’s government financing needs are the highest in eastern Europe, accounting for almost a fifth of its economy, Moody’s Investors Service said.

Hungary needs to borrow the equivalent of 19 percent of its gross domestic product this year, higher than 10 of its regional peers, Moody’s said in a report today. It’s followed by the Czech Republic, which needs to raise the equivalent of 12.7 percent of GDP. Estonia’s borrowing requirements are the lowest at 3.2 percent, according to Moody’s.

Eastern Europe’s total borrowing needs will shrink from last year relative to the region’s economic output as governments keep spending under control and economic growth picks up, Moody’s said. The outlook for the region is improving as contagion risks from the euro area’s debt crisis recede.

Borrowing needs will increase 4.1 percent from last year to 184 billion euros ($247 billion), Moody’s said. Relative to GDP, they will fall “slightly” to 9.9 percent from 10.2 percent last year, according to the company.

External bond issuance will total $21 billion, while domestic market issuance will amount to about $151 billion euros, the ratings company said.

As governments continue to cut spending, average government deficit will shrink to 2.3 percent of GDP from 2.5 percent in 2012, Moody’s said.

Even so, government debt will rise to 47 percent of economic output in 2013 from an estimated 45 percent last year, before stabilizing over the next two years, according to Moody’s. Average debt in the region jumped from 29 percent of GDP in 2008 when Lehman Brothers Holdings Inc.’s collapse triggered the global financial crisis.

The 11 countries included in the Moody’s survey ranked by 2013 borrowing needs in descending order are Hungary, the Czech Republic, Slovakia, Turkey, Romania, Poland, Slovenia, Lithuania, Latvia, Bulgaria and Estonia.

Editors: Peter Branton, Vernon Wessels

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