Hungary gen govt deficit 0.2% of GDP in Q3


Hungary had a ESA95 general government deficit of HUF 17.3 billion in the third quarter of 2012 or 0.2% of GDP during the period, preliminary data published by the Central Statistics Office (KSH) on Thursday show.

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.


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