Inflation report puts fiscal deficit below target


The latest inflation report of the National Bank of Hungary (MNB) puts this year’s ESA general government deficit at 2.7% of GDP, below the 2.9% official target. The projection assumed, as did the MNB’s earlier one, that all of the HUF 100 bln – 0.3%-of-GDP – reserves in the Country Protection Fund remain unspent.

The report puts the 2015 deficit at 2.6% of GDP, also 0.2% lower than the government target in the Hungary’s updated convergence program sent to Brussels at the end of April. Both deficit forecasts are down from the respective 2.9% and 3.1% deficit ratios projected in the March Inflation Report. The report explained the improvements with better-than-foreseen budget facts and improved growth prospects.

Most significantly, the MNB staff raised its forecast for revenue from wage-related taxes by 0.1% of GDP and revenue from consumption related taxes by 0.2% of GDP compared to the March forecast. They also calculated revenue from the new ad tax into the forecast. More-than forecast spending on public work schemes would raise spending by the National Employment Fund by 0.1% of GDP. They raised their forecast for the 2014 surplus of the local council sector by 0.1%-of-GDP; this effect will be offset by similarly higher spending elsewhere.

They left their forecast for 2014 interest rate spending unchanged as they expect savings from a significant yield fall will be offset by the expenses of the large pre-financing issues of the first half. The MNB published the quarterly report in full on Thursday after publishing the main inflation and GDP forecasts of the report on Monday. 


Business, consumer confidence slip in May Analysis

Business, consumer confidence slip in May

Parl't elects Orbán prime minister Parliament

Parl't elects Orbán prime minister

New managing director at LG Electronics Hungary Appointments

New managing director at LG Electronics Hungary

Airport bus fare could rise to HUF 1,500 City

Airport bus fare could rise to HUF 1,500


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.