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General govʼt deficit confirmed at 169% of 2017 target

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Hungaryʼs cash flow-based general government, excluding local councils, ran a HUF 1.974 trillion deficit at the end of December, thus reaching 169.2% of the HUF 1.166 tln full-year target, the Ministry for National Economy confirmed in a second, detailed reading of data on Tuesday, as reported by state news wire MTI.

As reported earlier, the gap was widened by advance payments on European Union funding, the ministry confirmed. While total budget expenditures on EU programs reached HUF 2.555 tln last year, transfers from Brussels came to just HUF 1.015 tln, it explained.

The cash flow-based central budget deficit reached HUF 1.904 tln at yearʼs end and the social security funds were HUF 142.2 bln in the red, the ministryʼs statement shows. Separate state funds finished the year with a HUF 72.5 bln surplus.

Revenue from VAT, personal income tax and payroll tax rose, lifted by higher wages as well as government measures to crack down on the shadow economy and boost employment, the ministry said. This higher revenue, as well as savings on some expenditures, allowed the government to reallocate some funding to priority areas at the end of the year without putting fiscal stability at risk, it added.

The 2017 deficit calculated using the European Unionʼs accrual-based methodology is expected to be "around 2%" of GDP, under the 2.4% target, the ministry noted.

Hungaryʼs state debt as a percentage of GDP may have fallen  1.5 percentage points to 72.4% at the end of last year, from 73.9% at the end of 2016. MTI noted that even if the EU requires Hungary to include Magyar Eximbank within the general government (Eurostat, the EUʼs statistical office, has claimed that the institution should be included within the state budget), the ratio would still decline at the same rate to 74.5%.

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