Hungary Deficit Rises to 121%

Hungary’s cash flow-based government, excluding local councils, ran a HUF 1,646.2 billion ($5.87 billion) deficit at the end of August, the ministry of finance said in a preliminary release. The deficit thus reached 121% of the HUF 1,360.7 billion full-year target.

Within the general government, the central budget ran a HUF 1,708.0 billion deficit at the end of August, while separate state funds and the social insurance funds had surpluses of HUF 21.8 billion and HUF 40.0 billion, respectively, Econews reported.

The ministry noted that pre-financing for EU-funded projects reached HUF 1,388.5 billion by the end of August, while transfers from Brussels came to just HUF 183 billion.

Expenditures were also lifted by spending on fully central budget-funded projects, such as the Modern Cities Program and the Healthy Budapest Program, as well as road renovations and support for corporate investments.

A combined HUF 30.7 billion of family subsidies for September were paid early, in August, to help out with households’ back-to-school expenses, the ministry added.

Revenue from VAT in January-August was up HUF 169.3 billion from the corresponding period a year earlier, while revenue from personal income tax climbed HUF 170.4 billion and revenue from payroll taxes increased by HUF 187.6 billion.

The ministry attributed the improvements to the shrinking shadow economy, stronger economic growth, expanding employment, and a dynamic increase in wages.

In the month of August alone, the general government deficit came to HUF 155.3 billion.

The deficit target of 2.4% of GDP for the full year was calculated using European Union accrual-based accounting rules, is “realistic” and “achievable” parallel with economic growth over 4%, the ministry said.