Gen govʼt deficit widens to nearly HUF 1.052 tln at end-May

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Hungaryʼs general government deficit, excluding local councils, reached nearly HUF 1.052 trillion at the end of May, widening on pandemic defense spending, the Finance Ministry said in a preliminary release on Monday, according to a report by state news wire MTI.

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The ministry noted that the government had taken decisions on HUF 590 billion of procurements related to the COVID-19 pandemic by the end of May and HUF 450 bln of that amount had already been paid.

"The government - in the course of pandemic preparedness, just as under the state of emergency - will ensure all necessary resources for defense," the ministry said.

The ministry noted that pre-financing for European Union-funded investments continued to impact the general government balance. While expenditures related to such investments reached HUF 967.6 bln by the end of May, transfers from Brussels came to just HUF 486.7 bln.

Hungary has long pre-financed EU-supported projects to avoid any backups at the end of funding periods. The practice affects the cash flow-based general government balance but not the accrual-based ESA balance.

The ministry said expenditures were also raised during the period by HUF 55.8 bln in spending for maintaining roads, HUF 26.3 bln for road renovations, HUF 53 bln for upgrading roads in villages, HUF 29.1 bln for investments made in the framework of the Modern Cities Program and HUF 24.4 bln for investment incentives for businesses. Spending on subsidies for purchases of big passenger cars for large families reached HUF 22.6 bln.

The central budget ran a HUF 910 bln deficit at the end of May, the social insurance funds were HUF 154.3 bln in the red and the separate state funds had a surplus of HUF 12.8 bln.

The ministry said the 3.8%-of-GDP ESA deficit target remains achievable.

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