HUNGARY: Estimation of Drug Distribution and Production in the Hungarian National Accounts

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The National Accounts in Hungary calculate illegal activities for three types of activities: drugs, prostitution, smuggling of tobacco.
The ESA 2010 GNI Inventory of Hungary (2015) provides the methodological basis; the reference year of the calculation is 2011 as reported in the GNI Questionnaire 2015.
According to Hungarian legislation, production, distribution and possessing drugs over a certain quantity are illegal; production, consumption and income deriving from this activity are treated as part of the hidden economy.
For estimation of income and consumption deriving from drug distribution and production the following yearly quantities are estimated:
- the number of persons using drugs by types of drugs,
- the quantity of purchased drugs,
- the average market price of drugs put into circulation,
- the income coming from trade of drugs by residency of traders,
- the value of domestic production.

Primary data inputs include:
- Reports of the Drug Committee (annual reports to Parliament),
- Government’s report on the situation of youth (every second year),
- Police department reports specialized on drugs,
- Country Report to European Monitoring Centre for the Drugs and Drug Addiction (annual),
- Annual reports of the Supreme Prosecutor’s Office and Yearbook of the National Security Office.
Medical literature is used to derive baseline daily doses; these baseline doses are adjusted downward to reflect that addicts do not consume every day and regular non-addict consumers purchase smaller amounts.
Published detections give quantity and value at domestic “retail” prices; import prices are estimated to be one fourth or one fifth of domestic retail.

Official findings indicate about 200 thousand persons (about 2 per cent of the total population) more or less addicted to drug consumption, including occasional consumers.
Of these:
- Ten per cent prepare narcotics for own use from glue, paint-thinner and pills (counted within the 200 thousand but excluded from the drug market calculations).
- After eliminating the above not-ordinary consumers, the remaining 180 thousand comprises:
- 50 thousand drug addict,
- 80 thousand regular consumers,
- 50 thousand occasional consumers.
Occasional consumers are excluded from estimates because their consumption is highly volatile and incidental.
Substance mix among addict and regular consumers:
- about one third take pills (LSD, SPEED, Ecstasy, Amphetamine),
- nineteen percent take Marijuana,
- fourteen percent take Heroin.
The numbers of consumers are revised as necessary in subsequent and backward calculations.

Baseline to practical dose adjustments:
- Heroin: theoretical daily dose 0.5 milligram for an addict becomes 0.3 milligram in practice; average heroin-consumer daily dose cited as 0.2 milligram, addict consumer’s is 0.5 milligram consumed on a certain day.
- Marijuana: theoretical 3-3.5 gram daily dose becomes 2 gram in practice.
Using practical daily doses multiplied by an estimated number of 130 thousand consumers yields about between 30 and 40 tons of consumed drugs annually.
Seizures:
- customs officers and police each seize about 1.5-2 tons of drugs yearly,
- the ratio of reconnaissance (seizures to total consumption) is between 5-10 per cent.
The membership of Hungary in the European Union has coincided with stagnation or slight decrease of average drug prices.

Published detection data report domestic “retail” prices; import prices are much less (one fourth or one fifth of domestic retail).
Historical market structure:
- At the beginning of the 1990s, foreign criminals dominated production/manufacturing and leadership of drug trade; about half of income from drug trade belonged to foreign possessors.
- Subsequently that foreign share decreased by a fifth.
- Recent reports indicate the spread of foreign drug dealers stopped, but their income conditions became stable or a bit stronger.
Cross-border aspects:
- The negative impact on external trade and the balance of payments arises because a quarter of income deriving from drug is brought abroad.
- This negative impact is slightly reduced by the fact that 6-8 per cent of drugs sold in Hungary are purchased by foreigners (several police reports).
- At several international events (e.g., Formula I. Race, Festival of Sziget) a third of the detected drug consumers were foreigners.
Estimation of income paid abroad from illegal activity:
- The estimation was based on annual reports of the Supreme Prosecutor’s Office and police findings concerning foreign crime perpetrators.
- The estimation assumed the ratio of foreign perpetrators abusing drugs is higher than that of domestic perpetrators; “we set the ratio of income paid to abroad from drug trade between the two ratios.”