Hungary’s government deficit reaches 16.5% of full-year target at end-March

Deals

Hungaryʼs cash flow government deficit, excluding local councils, reached HUF 125.8 billion at the end of March, or 16.5% of the HUF 761.6 bln target for the full year, the National Economy Ministry confirmed in a second reading of data today, Hungarian news agency MTI reported.

The central budget ran a HUF 158.2 bln deficit in the first quarter, while the social insurance funds and separate state funds had surpluses of HUF 29.9 bln and HUF 2.5 bln, respectively. 

The ministry noted that the deficit was the smallest recorded in a first quarter for the past 15 years.

In the same period a year earlier, the deficit reached HUF 536.7 bln.

The ministry attributed the drop in the deficit to higher tax revenue and “significantly lower” fiscal expenditures.

The government deficit in the month of March alone reached HUF 140.8 bln, well under the HUF 226 bln in the same month a year earlier.

The ministry said revenue from both payroll tax and taxes on consumption grew continuously thanks to the favorable economic environment and rising employment. A crackdown on tax evasion improved taxpayer morale and also contributed to the lower deficit, it added.

The ministry also noted the impact in the base period of higher co-payments on European Union-supported projects at the close of the previous funding cycle as well as higher interest expenditures.

The ministry said it continues to stand by the 2%-of-GDP deficit target for the full year, calculated according to the European Unionʼs accrual-based accounting rules.

“Stable general government revenues, the performance of the domestic economy and government measures taken in the interest of ‘whitening’ the economy are a guarantee for achieving the target,” it added.

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