Hungary general govt runs surplus in Oct; Jan-Oct deficit at 112.1% full-year target

Deals

Hungary’s cash flow-based general government, excluding local councils, ran a HUF 242.7bn surplus in October, reducing the January-October deficit to HUF 1,327.8bn, or 112.1% of the modified full-year target, the National Economy Ministry said in a detailed report on Tuesday, confirming preliminary data published on November 7.

The ministry said HUF 200bn in realised revenue from the Pension Reform and Debt Reduction Fund contributed in significant measure to the surplus in October.

The ministry said that it was discounting the effect of the state’s purchase of a 21.2% stake in Hungarian oil and gas company MOL for €1.88bn in a deal announced in May from annual comparisons because it is a one-off item.

Adjusted for the pro rata effect of HUF 528.8bn revenue the budget is receiving from private pension fund assets transferred to the Pension Reform and Debt Reduction Fund and revenue from extraordinary sectoral taxes, as well as excluding the purchase of the MOL stake, the deficit would have reached HUF 749.3bn or 109% of the full-year target at the end of October, the ministry said.

The ministry maintained its projection for a full-year deficit of 97.6% of the target. It projects a HUF 414.9bn deficit in the fourth quarter.

The projection for Q4 does not include a takeover of debt from railway company MAV and Budapest public transport company BKV, costs related to the buyout of public private partnerships and an estimated HUF 255bn in VAT refunds the state must pay under a ruling by the European Court.

Parliament approved late Monday an amendment to the 2011 Budget Act mandating the takeover by the state of up to HUF 64bn of MAV’s debt.

In a breakdown of the general government, the ministry said the central budget ran a HUF 1,257.0bn deficit in January-October. The gap for the social insurance funds reached HUF 151.0bn, but separate state funds had a surplus of HUF 80.2bn.

In October alone, the central budget had a surplus of HUF 108.7bn and the social insurance funds and the separate state funds were HUF 128.9bn and HUF 5.1bn in the black, respectively.

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