Deficit at 17.7% of full-year target at end of May

Banking

Hungaryʼs cash flow-based general government, excluding local councils, ran a HUF 176.4 billion deficit at the end of May, reaching 17.7% of the full-year target of HUF 998.4 bln, the Ministry of Finance said Friday, state news wire MTI reported.

The central budget deficit reached HUF 253.4 bln, while the separate state funds and the social insurance funds had respective surpluses of HUF 51.5 bln and HUF 25.5 bln, preliminary figures show.

In May alone, the general government deficit came to HUF 137.4 bln.

The ministry said revenue from VAT was up HUF 367.3 bln in January-May from the corresponding period a year earlier, while revenue from personal income tax rose HUF 91.3 bln. Payroll tax revenue climbed HUF 209.2 bln, while excise tax revenue increased HUF 46.5 bln.

The ministry attributed the growing revenue to higher wages and employment, which, along with tax preferences, have lifted consumption, as well as to government measures to improve tax compliance, combined with tax cuts.

Pre-financing for European Union-funded projects continued to affect the balance: the government paid out HUF 608.1 bln for EU projects in January-May, while transfers from Brussels came to just HUF 305.9 bln. The pre-financing supported projects undertaken within the framework of the Modern Cities Program, railway upgrades, various developments in Pest County, and incentives for efficiency-boosting investments at businesses.

"The so far favorable economic trends, and their expected development, ensure fiscal balance and stability," the ministry said. The deficit target of 1.8% of GDP for 2019, calculated using the EUʼs accrual-based methodology, is "achievable," it added.

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