Deficit reaches 123% of full-year target at end of October

Telco

Hungaryʼs cash flow-based general government, excluding local councils, ran a HUF 1,678 billion deficit at the end of October, the Ministry of Finance confirmed in a second reading on Wednesday.    The deficit thus reached 123.3% of the HUF 1,360.7 bln full-year target, state news wire MTI calculated.   

The central budget deficit reached HUF 1,691.3 bln, while separate state funds had a surplus of HUF 37.6 bln and the social insurance funds were HUF 24.3 bln in the red.

Alone in October, the general government ran a HUF 181.6 bln deficit.

The ministry noted that staff at budget-funded institutions received their October paychecks early, on the last day of the month, rather than early in November, because of the long All Saintsʼ Day holiday weekend. Those payroll transfers exceeded HUF 100 bln, it said. 

Some HUF 30 bln of family subsidies were also transferred early, while pre-financing of European Union-funded projects continued during the month, it added. EU transfers came to HUF 131 bln in October, bringing the total for the year so far to HUF 472 bln, a level which "could rise significantly by yearʼs end," the ministry said. 

Central budget expenditures came to HUF 12,215.0 bln in January-October 2018, reaching 88.1% of the full-year target. Revenues reached HUF 10,523.6 bln, 83.8% of the target for the whole year.   

Tax revenues continued to grow, lifted by a crackdown on the shadow economy and the healthy pace of economic growth, the ministry said. VAT revenue was HUF 3,241.2 bln for the period, up 15.7% from the same period a year earlier. Revenue from excise tax rose 8.8% to HUF 911.7 bln, lifted by higher taxes on tobacco products. Revenue from personal income tax climbed 13.2% to HUF 1,789.9 bln, supported by wage growth. Revenue from corporate tax dropped 50.7% to HUF 183.7 bln.

On the expenditure side, subsidies for families with children rose 6.5% to HUF 367.1 bln, mainly because family subsidies were transferred early due to a long weekend. Subsidies for home purchases for families with children rose 9.9% to HUF 149.6 bln. Support for local councils was up 10% at HUF 705.4 bln. Net interest expenditures fell 14.8% to HUF 833.7 bln as a result of the timing of redemptions.

The ministry confirmed the full-year deficit target of 2.4% of GDP, paired with GDP growth of over 4%.

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