Analysts say government likely to meet 2011 deficit target

The government would likely meet its full-year general government deficit target of HUF 1,517.1bn, analysts told MTI.

National Economy Ministry’s data on Wednesday showed a cash-flow-based general-government deficit of HUF 1,247.9bn, or 82.3% of the modified full-year target in the first eleven months of 2011.

Gergely Suppan of Takarekbank told MTI that the government, which had a budget surplus of HUF 79.9bn in November, should record a significant surplus again in December due to year-end tax revenue. Mr Suppan said that the likely December surplus and the one-off receipt of private-pension funds transferred to the state earlier this year will enable the government to keep its deficit under 2.8%-3.0% of GDP according to European Union’s ESA-95 accounting standards even after raising the full-year target by HUF 330bn due to an assumption of part of the debt of Hungarian state-owned railway MAV and the capital raise at the Hungarian Development Bank.

David Nemeth of ING Bank said that revenue from corporate tax and sector-based crisis taxes should make it possible for the government to meet its 2011 deficit target, adding that it is uncertain when the government will take receipt of the remaining private-pension funds transferred to the state earlier this year.

Econews calculated that there is still HUF 110bn in revenue stemming from transferred private-pension funds contained in this year’s budget after the government took receipt of HUF 200bn in such funds in November and 219.2bn in such funds in October.

Mr Nemeth said it remains to be seen when the government will pay an estimated HUF 255bn in VAT refunds pursuant to an earlier European Court ruling.