CMFB calls Hungary’s state-owned Eximbank a “captive financial institution”

August 29, 2017

In mid-July this year the EU’s Committee on Monetary, Financial and Balance of Payments Statistics (CMFB), an advisory committee to the European Commission and the European Central Bank, released an opinion classifying Hungary’s state import-export bank, Eximbank, as a “captive financial institution controlled by government.”

According to the opinion, Eximbank does not meet criteria of financial intermediary as defined in the European System of Accounts (ESA2010), Eximbank –

  • is 100% owned by the state,
  • has limited autonomy in its main corporate policies,
  • acts on behalf of the state for public policy purposes, mainly financing export-import activities,
  • is constrained regarding its assets and liabilities, and
  • is a non-market producer.

The opinion says “Eximbank has the features of a captive financial institution controlled by government”. While the state-owned bank acts as though it is operating on the market, in reality it finances projects important for the government (and oligarchs close to the government), and its losses do not appear in the state budget. For this reason, the bank’s assets and liabilities are to be factored into national debt calculations, in which case Hungary’s state debt level could jump by as much 2.5 percentage points, according to online daily

According to Gergely Tardos, director of OTP’s Center for Analysis, were Eurostat (the European Commission’s statistical agency) to include Eximbank’s debts in the state budget it would necessitate a retroactive adjustment to Hungary’s 2016 year-end GDP to public debt ratio, increasing it by as much as 2-2.5 percentage points.

This debate between Eurostat and Hungarian authorities has been dragging on for years, and reached a new point last year when Eurostat took the position that Eximbank is certainly part of the state.

The CMFB’s July opinion sides with Eurostat in the debate.

According to, the Hungarian government can still refuse  to acknowledge this decision and publish its own hungaricum statistics. But Eurostat will now have grounds to publish figures pertaining to Hungary’s state finances which take Eximbank into account.

Since Prime Minister Viktor Orbán and Fidesz returned to power in 2010, Eximbank has financed a number of deals unrelated to foreign trade, including Andy Vajna’s purchase of TV2 (and subsequent operating costs), István Garancsi’s purchase of a 140 acre development property on the Danube known as Kopaszi gát, and hotelier projects. This, and the fact that in recent years Eximbank has been recapitalized on several occasions by the state, has led to its classification by the Committee on Monetary, Financial and Balance of Payments Statistics as a “captive financial institution controlled by government.”