2020 gen gov't deficit swells to nearly HUF 5.549 tln on pandemic defense, stimulus

Debt

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Hungary's cash flow-based general government deficit, excluding local councils, reached almost HUF 5.549 trillion at the end of last year, the Finance Ministry confirmed in a detailed reading of data on Friday, state news wire MTI reports.

The ministry said the government's "most important goal" during the first and second waves of the pandemic is "to defend lives and preserve the ability of the Hungarian economy to function".

The government has decided "there can be no financial obstacle to providing proper healthcare for or preserving the job of anyone", it added.

The central budget ran a nearly HUF 4.954 tln deficit for the full year, separate state funds had a HUF 46.7 bln surplus and the social insurance funds were HUF 641.8 bln in the red.

In December alone, the general government deficit came to approximately HUF 2.251 tln.

The ministry said spending on medical equipment necessary for pandemic defense came to HUF 614.7 bln.

Year-end expenditures were lifted by about HUF 1.2 tln in additional spending on taking over hospital debt, on economic defense, on achieving educational and healthcare goals, and on financing cultural activities.

The ministry noted that payouts for European Union-funded projects reached over HUF 2.025 tln for the year, while transfers from Brussels came to just over HUF 1.684 tln.

The government has been pre-financing EU-funded projects for years to avoid backups and ensure all available monies are used up.

The ministry expects the general government deficit calculated according to the EU's accrual-based accounting rules to be "around 9%" of GDP for 2020.

The detailed data show last year's general government revenue rose 6.1% to just above HUF 22.865 tln, while expenditures climbed 25.3% to HUF 28.414 tln.

On the revenue side, VAT generated HUF 4.669 tln, up 3%, and revenue from excise tax increased 1.7% to HUF 1.196 tln, as higher tax on cigarettes countered a drop in revenue from tax on vehicle fuel. Revenue from personal income tax grew 4.3% to nearly HUF 2.528 tln. 

Revenue from contributions to the Pension Insurance Fund fell 2.4% to almost HUF 3.24 tln, while revenue from contributions to the Health Insurance Fund edged up 0.4% to nearly HUF 1.714 tln.

On the expenditure side, government subsidies increased 57.5% to HUF 663.4 bln, lifted by HUF 181.4 bln in additional support for public transport and HUF 55.9 bln in extra support for operating the country's network of railways.

Support for home construction rose 31.5% to HUF 251.5 bln, while spending on subsidies for families was practically flat at HUF 398.4 bln.

Support for local councils increased 5.5% to HUF 821.1 bln.

Net interest expenditures rose 16.4pc to HUF 980.5 bln.

Hungary's central budget debt stood at just above HUF 36.684 tln at the end of 2020, climbing about HUF 7.002 tln from 12 months earlier. The ministry attributed the increase to HUF 4.880 tln in net forint issues and HUF 1.65 tln in net FX issues, although it noted that HUF 895.2 bln of the FX issues was used to pre-finance FX debt maturing in 2021. The weaker forint added HUF 547 bln to the debt.

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