Government deficit reaches 19% of full-year target

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Hungaryʼs cashflow-based government deficit, excluding local councils, reached HUF 144.9 billion at the end of April, approximately 19% of the HUF 761.6 bln target for the full year, the National Economy Ministry confirmed in a second reading of data today, state-owned news agency MTI reported.

The central budget deficit came to HUF 209 bln. The social insurance funds had a surplus of HUF 42.6 bln, while separate state funds had a surplus of HUF 21.5 bln, according to MTI.

The ministry said expenditures were “significantly lower” than in the same period a year earlier while tax revenue was “higher than expected” thanks to “responsible and disciplined fiscal management”, MTI reported.

Economic growth and higher employment raised revenue from taxes on labor and consumption, and a crackdown on tax evasion improved taxpayer morale, the ministry said, according to the news agency. Co-payments for European Union-supported projects were lower because of the close of the previous funding cycle, and interest expenditures were also lower, the ministry added.

The full-year deficit target of 2.0% of GDP, calculated according to EU accounting rules, “continues to be realistic and achievable”, the ministry said, according to MTI. The ministry noted that a proposed amendment to the 2016 budget before lawmakers would not affect the deficit.

The government submitted an amendment to Parliament earlier in May that would raise the expenditure and revenue sides of this yearʼs budget both by HUF 407.3 bln. The bill would raise targeted revenue from corporate tax by HUF 289.4 bln to HUF 689.9 bln.

The detailed data released by the ministry today show corporate tax revenue stood at HUF 40.7% of the unamended HUF 400.5 bln full-year target at the end of April. 

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