According to a measure released late Friday by the Ministry of Finance, Hungary’s government would have five years instead of the current eight days to compensate the National Bank of Hungary (NBH) if the bank registers a loss on its operations.
Hungary’s budget deficit has increased this year as a result of a spending spree ahead of the April elections, as well as rising energy prices and additional gas purchases from Russia.
The proposed change to the statute governing the functioning of the NBH would allow the government to divide payments to the bank into five equal instalments over a five-year period, lessening the immediate load on the public budget.
The NBH lost 200.9 billion forints ($497.44 million) in the first half of 2022 alone, as its interest costs skyrocketed and its balance sheet increased.
The proposed reforms aim to ‘ensure the central bank has appropriate capital while simultaneously decreasing budget risks,’ according to the Finance Ministry’s legislation.
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