Press release, 21.04.2016.
Press Release on Eurostat’s reservations in relation to the Hungarian EDP Report
Hungarian statisticians insist on the methodological principles of national accounts and do not consider the matter closed.
Pursuant to Council Regulation (EC) No. 479/2009, Eurostat, the statistical office of the European Union, examines the compilation of the Excessive Deficit Procedure (EDP) reports in the context of – generally bi-annual – dialogue visits to Member States. Methodological issues regarding the compilation of the Report are regularly raised during these consultations. In the past two years, Eurostat examined the statistical classification of state-owned financial institutions (export-import banks, development banks, special financial institutions) in several countries. On the occasion of its latest dialogue visit to Hungary, issues regarding the statistical classification of these financial institutions were discussed as well.
In its press release issued today, Eurostat expressed reservations on the Hungarian EDP Notification, stating, that in its opinion, Eximbank should be classified into the government sector. Hungarian statistical authorities, however, view the classification of Eximbank otherwise, and presented their arguments regarding the matter in a letter sent to Eurostat. The two parties are still involved in a debate over the issue, which prompted Eurostat to formulate its reservations.
According to the recommendation issued by Eurostat, Eximbank should be reclassified as a “captive financial institution”, a new, special institutional category. This category resulted from the renewal of the statistical methodology of national accounts (ESA 2010) in the sector of financial corporations. The organisations included in this category are not engaged in financial intermediation; they do not provide financial services to the general public but invest or lend funds – typically obtained from the parent company or from group members – for a limited group of clients for a special purpose, or redistribute the funds raised in the market to group members. Financial organisations classified as captive financial institutions – typically holding companies or special purpose entities (SPEs) – are “captive” to their owners and as such, their institutional independence is questionable.
In our opinion, Eximbank does not meet the above criteria: it is engaged in actual financial intermediation, it raises funds in the market and offers financing to a broad range of market participants. The renewed methodological standard of national accounts (ESA 2010) did not change the definition of financial intermediaries – including credit institutions –; consequently, we do not see an opportunity to modify the sector classification applied so far. In our view, Eurostat’s decision on the classification of certain organisations into the government sector is not in line with the rules of ESA 2010, which spreads uncertainty in the statistical methodology and disrupts the harmony between the statistics of national accounts.
Eurostat recommended the reclassification of Eximbank not on the basis of individual lending transactions but based on its view that the core activity of Eximbank (i.e. that Eximbank, serving economic policy objectives, offers financing to corporations at preferential interest rates to stimulate exports) may warrant its classification into a special category.
Hungarian statistical authorities are still seeking to clarify the issue and to that end, in the near future they will initiate a consultation at forums competent in the issue regarding the interpretation of the sectorisation of captive financial institutions in accordance with the ESA 2010 regulation.
|Hungarian Central Statistical Office||
Magyar Nemzeti Bank
H-1024 Budapest, Keleti Károly u. 5-7. Phone: +36 (1) 345 6000
Postal address: P.O.B. 51 Budapest, H-1525