Official: Balanced budget within reach

The drafting of the 2017 budget is in its preliminary phase and many scenarios are being considered. To achieve a balanced budget, strong economic growth and further measures related to the whitening of the economy are needed, said Bánai.

According to Bánai, not counting certain extra expenses and revenues, a HUF 700 billion deficit needs to “disappear” for the budget to be balanced. That is around 2% of the HUF 35,000 bln GDP.

The government is not only looking at how a balanced budget could be achieved but also at what effects it would have on the real economy and employment, he added.

For the deficit to be at zero, economic growth would need to be around 3% of GDP, contributing HUF 450-500 bln in extra revenue. Reducing state bureaucracy could lower expenses but on the expenditure side this has not taken into consideration the governmentʼs revamping of its home purchase subsidy program for families with children, the state secretary said.

Ágnes Hornung, state secretary of the National Economy Ministry said at the event that they are expecting HUF 150 bln in extra expenses this year due to the revamped subsidy system.

Speaking about special sectoral taxes, Bánai noted that the government is not planning to lower any special taxes apart from the bank levy.

Bánai said the upgrade of the Paks nuclear power plant is also affecting ESA deficit as it is being implemented with the stateʼs involvement. In 2016, expenses related to the upgrade could be around HUF 113 bln and grow to HUF 200 bln in 2017.

Asset sales could raise government revenues, noted Bánai, mentioning the sale of the Budapest Bank, ongoing state-owned farmland sales and sales of unspecified real estate items. Bánai believes that asset sales will contribute far more than the HUF 130 bln present in this yearʼs budget.