2022 deficit could, but presumably won't, be under target - MNB


Image by Jessica Fejos

The National Bank of Hungary (MNB) raised the possibility of reducing the budget gap at a faster pace next year in a biannual fiscal report on Friday, but acknowledged that the deficit will presumably reach 5.9% of GDP, in line with the government target, as additional revenues are spent, according to a report by state news wire MTI.

"On the basis of favorable macroeconomic projections, a more ambitious reduction of the [general government] deficit and state debt than the one at present would be a realistic goal, which is why it would pay off to save surplus resources from economic growth in 2022," the MNB said in the report.

"It can be presumed, however, based on extra expenditures in the budget, that additional room for maneuver resulting from higher than expected growth will be used by the budget: extra revenue will be spent, thus we project a deficit consistent with the target," it added.

MNB governor György Matolcsy earlier warned that the 5.9%-of-GDP deficit target for 2022 could set the country up for "persistently high inflation" and argued that the economic recovery would allow Hungary to return to a path of fiscal balance sooner after pandemic stimulus widened the budget gap in 2020 and 2021. Addressing his concerns, Finance Minister Mihály Varga said that "if we want to overtake in the curve" - borrowing one of Matolcsy's signature phrases - "we have to press the gas pedal harder".

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