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First-half general govʼt deficit at 39.1% of full-year target

Hungaryʼs cash flow-based general government, excluding local councils, ran a deficit of HUF 390 billion, or 39.1% of the full-year target at the end of June, the Ministry of Finance said in a preliminary release on Monday, state news wire MTI reported.

The deficit target for the full year is HUF 998.4 bln.

In June alone, the general government deficit came to HUF 213.6 bln.

The central budget deficit reached HUF 467.3 bln in the first half of 2019, while separate state funds and social insurance funds had surpluses of HUF 61.0 bln and HUF 16.3 bln, respectively.

The deficit target of 1.8% of GDP for 2019, calculated using the EUʼs accrual-based methodology, is "realistic and achievable," while the state debt ratio continues to drop, the ministry said.

The ministry said revenue from personal income tax rose HUF 105.4 bln in the first six months from a year earlier, while payroll tax revenue, including pension and health contributions, rose HUF 260.1 bln in the period. Revenue from VAT was up HUF 397.4 bln in January-June, while excise tax revenue increased HUF 45.3 bln.

The ministry attributed the growing revenue to higher wages and employment, which, along with tax preferences, have lifted consumption, as well as to government measures to improve tax compliance.

Transfers from Brussels came to HUF 346.6 bln in H1, while pre-financing for European Union-funded projects continued and reached HUF 710.6 bln in the period. The co-financing supported projects undertaken within the Modern Cities Program, railway upgrades, various developments in Pest County, tourism projects, and incentives for efficiency-boosting investments at businesses.

"The general government is characterized, as before, by stability and growing revenues as a result of the disciplined budgetary policy of the government and favorable economic processes," the ministry said.