Hungary’s general government, excluding local councils, had a HUF 75.9 billion surplus in April, reducing the deficit for January-April to HUF 666.2 billion or 96.9% of the full-year target, the National Economy Ministry said on Thursday.

The ministry confirmed Hungary will meet the government’s ESA 2.94% deficit target and attributed the high pro-rata deficit to the timing of revenue and cost-savings.

If the balance at the end of April is adjusted to reflect these items pro-rata, the deficit would be HUF 490 billion or 71.3% of the full-year target, the ministry said.

The target is calculated without the effect of the transfer of private pension fund assets of Hungarians returning to the state pension pillar. It also excludes the takeover of the debt of transport companies MAV and BKV and planned buyout of public private partnerships (PPPs). Including these factors, the ministry earlier projected an ESA surplus of about 2%.

The deficit dropped from 108% of the annual target at the end of March.

The April surplus resulted from a central budget surplus of HUF 101.1 billion a HUF 5.9 billion surplus of separate state funds and a HUF 31.1 billion deficit of the social insurance funds. The surplus, as were the big deficits of the previous months, was the result of the timing of revenue and expenditures, the ministry said.

The April surplus cut the January-April deficit of the central budget to HUF 586.5 billion or 95.6% of the full-year target. The deficit of the social insurance funds rose to HUF 129.5 billion by the end of April, reaching 146% of the full-year target. Separate state funds had a January-April surplus of HUF 49.8 billion almost 3.5 times the targeted surplus for the full year.

The ministry noted that the HUF 75.9 billion central government surplus in April is a more than HUF 100 billion improvement from a HUF 27.1 billion deficit one year earlier. The four-month deficit was, however, HUF 29.2 billion lower last year, when, at HUF 637 billion stood at 73.2% of the 2010 total.

Standing by a projection published a month earlier, the ministry said the deficit will reach 176.1% of the full-year target by the end of June before falling to 144.0% by the end of September and finishing the year on target.

The ministry noted that about HUF 528 billion in revenue will arrive from the Pension Reform and Debt Reduction Fund, into which private pension fund assets are to be transferred, only in the second half of the year, and most of the HUF 250 billion of cost-saving measures decided on earlier will be implemented only in the remainder of the year.

 

Central budget revenues were HUF 48 billion lower in April than in the same month a year earlier with most of the drop registered in revenue from personal income tax and VAT as well as in revenue of ministries and other budget-funded organizations.

Central budget expenditure in April was almost HUF 191 billion less than in the same month a year earlier. Part of the decline was related to one-off items, such as the cost of the general elections or a wage supplement paid in the public sector in the base period, but spending on home support and support to local governments as well as interest rate expenditure were also all down year-on-year.

Interest rate expenditure fell HUF 24.4 billion to HUF 49.3 billion in the period and interest revenue was practically flat at HUF 10.5 billion causing net interest expenditures to fall by HUF 24.6 billion to HUF 38.7billion.

The year-on-year drop in interest expenditure mostly reflected timing as debt stock rose about 7.2%, based on data from March, and forint yields were 80bp higher than a year earlier, the ministry noted.

The ministry said that one-off effects made year-on-year comparisons difficult for both the social insurance and the separate state funds.