The deficit reached 1.7% of the HUF 761.6 bln full-year target.

The central budget ran a HUF 98.9 bln deficit during the period, while the social insurance funds and separate state funds had surpluses of HUF 48.9 bln and HUF 36.8 bln, respectively.

In May alone, the general government ran a HUF 131.7 bln surplus.

The ministry noted that the January-May deficit was almost HUF 500 bln lower than the gap in the same period a year earlier due to higher co-payments on European Union-supported projects at the end of the 2007-2013 funding cycle, and lower co-payments at the start of the new funding cycle, as well as higher revenue from corporate tax, VAT, personal income tax and social contributions.

The ministry attributed higher budget revenue to the “favourable economic environment” and “dynamically expanding employment” as well as a crackdown on tax evasion that has improved taxpayer morale. It also acknowledged the impact of the growth tax credit on higher corporate tax revenue.

The tax credit allows companies with fast-growing earnings to defer corporate tax payments on profit increases over a period of two years.

The 2%-of-GDP full-year deficit target, calculated according to EU accounting rules, “remains realistic and achievable”, the ministry said.