Hungary gen govt deficit 0.2% of GDP in Q3

The deficit in terms of GDP was the lowest since the start of the KSH time series in 1999. The record neared the previous low of 0.3% of GDP in Q2 2000.

The accrual-based deficit, calculated with European Union accounting standards, fell by HUF 345 billion or 5 percentage points of GDP from the same period a year earlier.

The deficit in the first three quarters of last year was HUF 375 billion or 1.8% of the period's GDP.

Excluding the effect of an assets transfer from private pension funds to the state that mainly affected 2011, the three-quarter deficit dropped by HUF 639 billion or 3.1 percentage points of GDP from the same period of 2011.

Excluding the pension transfer in 2011, general government revenue rose 6.3% in the first three quarters of 2012 from a year earlier to HUF 9,639.2 billion, with all revenue items rising.

Revenue from income taxation rose the most, by 12.1% in the first three quarters, due to the elimination of personal income write-offs in the lower income categories. Revenue from social security contribution was up 3.7% from the first three quarters of 2011. The contributions were raised last year but part of tax could be written off to help employers foot the cost of a wage rise to prevent a drop in nominal net wages due to the elimination of the preferences in low to average wage categories.

Q1-Q3 revenue from production and import taxes rose 6.4%, including a 6.0% rise in VAT revenue. Revenue from capital taxes rose 9.2%.

Three-quarter expenditure fell, in contrast, by 0.7%, pushed lower by a 13.8% yr/yr drop of gross capital formation -- government investments -- to HUF 460.4 billion. Social benefits in kind fell by a similar pace and other social benefits were unchanged from Q1-Q3 one year earlier. Payroll expenses rose the most, by 3.1% yr/yr, still below inflation, and interest expenditures were up 1.7%.

In Q3 alone, general government revenue rose 3.1% yr/yr to HUF 3,275.6 billion while expenditure was down 7.0% at HUF 3,292.9 billion.

Q3 revenue from income taxes rose by 11.1% and revenue from capital taxes rose by as much as 17.9% yr/yr. The proceeds of social security contributions was up 4.1% yr/yr. Revenue from production and import taxes rose a modest 2.1%, as revenue from VAT fell 2%, in the first yr/yr drop of VAT revenue since Q2 2011.

Only payroll expenditure rose, by 5.2% yr/yr, in Q3. Investment spending fell by 20.9% from a year earlier. Intermediate government consumption fell 1.9% interest expenditure dropped 6.6% yr/yr, expenditure on social benefits, excluding transfers in kind were flat at last year's nominal level. Other expenses, which include one-off items, were down by 36.2%.

Earlier information from KSH shows that revenue from the "crisis taxes", levied for a temporary three years on the telecom, energy and trade sectors in 2010, are accounted as production tax revenue. Most of the extraordinary banking levy, also introduced as a temporary measure in 2010, is accounted among capital taxes although part of it is booked among income or production taxes, as the tax varies within the financial sector.