Gen gov't deficit reaches HUF 3.298 tln at end-November, FinMin confirms

Debt

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Hungary's cash flow-based general government deficit, excluding local councils, reached HUF 3.298 trillion at the end of November, lifted by pandemic spending, the Finance Ministry confirmed in a detailed release of data, according to a report by state news wire MTI.

The deficit widened "as a result of the impact of the coronavirus pandemic on the economy and economic defense measures", the ministry said.

It said the cash flow-based deficit is expected to reach 8-9% of GDP this year.

The government is setting a deficit target of 6.5% of GDP for 2021, in light of economic stimulus measures, it added.

The central budget deficit reached about HUF 2.778 tln at the end of November. The social security funds were HUF 572.7 bln in the red and separate state funds had a surplus of HUF 53 bln.

The general deficit rose by HUF 693.9 bln from the end of October.

The deficit has swelled this year because of pandemic defense spending, economic stimulus and pre-financing for European Union-funded projects.

The ministry said spending on medical equipment necessary for pandemic defense came to HUF 599.4 bln by the end of November.

Payouts for European Union-funded projects reached approximately HUF 1.805 tln, while transfers from Brussels came to just over HUF 1.019 tln.

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

Among other expenditures, the ministry noted HUF 179.6 bln in business grants to boost competitiveness in the face of the coronavirus crisis, HUF 202 bln for tourism developments, HUF 58.3 bln for investment incentives, HUF 366.9 bln in spending on road construction and renovation, and HUF 61.8 bln for projects that are part of the Hungarian Villages Program. An inflation-linked top-up for pensioners added almost HUF 47 bln to expenditures in November, it added.

 "During the second wave of the pandemic, the government's most important goal is to protect life, preserve the ability of the Hungarian economy to function, protect jobs, and support businesses. The resources necessary for these measures have been ensured," the ministry said.

The ministry noted that central budget debt reached nearly HUF 35.14 tln at the end of November, up almost HUF 5.458 tln from the end of 2019. The debt rose on HUF 3.52 tln of net forint issues and HUF 1.518 tln of net FX issues. The weaker forint added another HUF 446.7 bln to FX debt, it added.

Net interest expenditures came to HUF 955.1 bln in January-November, up from HUF 776 bln in the base period.

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