Deficit exceeds full-year target at the end of June



Hungaryʼs cash flow-based general government, excluding local councils, ran a HUF 1.420 trillion deficit at the end of June, representing 104.4% of the full-year target, the Ministry of Finance confirmed in a second reading of data.

The central budget deficit reached HUF 1.476 tln while separate state funds had a HUF 15.3 billion surplus and social insurance funds were HUF 40.5 bln in the black. In June alone, the general government deficit came to HUF 233 bln, around a third in value compared to the monthly deficit in June 2017, national news agency MTI reported.

According to the ministry, the main budgetary trends for June were stable economic growth, rising revenue despite tax cuts and higher expenditure resulting from pre-financing of domestic and EU development projects. The ministry noted that pre-financing for EU-funded projects reached HUF 1.118 tln by the end of June, while transfers from Brussels came to just HUF 162 bln.

Expenditures were also lifted by spending on central budget-funded projects, such as the Modern Cities Program, the Healthy Budapest Program, hospital upgrades in the capital and priority road and infrastructure investments.

Interest expenditures were also a significant item for the month, reaching HUF 268 bln as several long-term, fixed-rate government bonds issued between 2008 and 2014 had their interest payment date in this period.

In the first half of the year budgetary revenue from VAT and personal income tax was up HUF 214.2 bln and HUF 128.3 bln, respectively, from the same period a year earlier, while payroll tax revenue climbed by HUF 141.2 bln.

The government is standing by its full-year deficit target of 2.4% of GDP and assumes GDP growth over 4%, the ministry said. Total revenue for the first six months of 2018 was HUF 9.064 tln and expenditure was HUF 10.485 tln compared to HUF 8.459 tln and HUF 9.367 tln respectively for the same period in 2017.

Corporate tax income in January-June was HUF 100.2 bln, down by HUF 180.2 bln compared to the first six months of 2017, because of carry-on effects of tax advance supplement provisions from last year and reduced revenues from the growth tax credit.

Income from excise tax at HUF 498.4 bln in January-June was up by around HUF 41 bln compared to the same period last year. Income from the financial transaction duty was up HUF 6.5 bln at HUF 114.6 bln and income from the extraordinary bank levy was HUF 24.31 bln for H1.

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