Hungary will have a 2% fiscal surplus in 2011, but is will still keep the 2.94% deficit target, according to the National Economy Ministry
Hungary is expected to have a general government surplus of 2% of GDP this year, but the surplus, resulting from the accounting of the transfer of private-pension fund assets, will not alter the government’s commitment to meet the original 2.94% deficit target as set by the 2011 Budget Act, the National Economy Ministry said on Friday.
Under EU methodology all the assets of those returning to the state pension system will improve the Maastricht balance, thus this year’s surplus would reach 4% of GDP. One-off items will, however, lower the surplus, the ministry said in a report regarding the implementation of the structural reforms contained in the government’s Széll Kalman Plan.
The above projection is based on using HUF 529 billion of the private pension fund assets to finance state pension expenditure as approved in the Budget Act.
All the remainder of the transferred private pension fund assets will be used to reduce state debt, the ministry said.
Taking over part of the debts of state-owned Hungarian railway MÁV and Budapest mass transit company BKV would trim 1.3% of GDP from this year’s government surplus.
A decision to take over some Public Private Partnership (PPP) projects would add cut the surplus by an additional 0.7% of GDP, the ministry said.
The decision to set aside a stability fund of HUF 250 billion – through freezing budgeted expenditure at various budget chapters – against unforeseen risk is a sign that the government is committed to meet the original deficit target which excludes one-off revenues.
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