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General government deficit reaches 103% of full-year target

Hungaryʼs cashflow-based general government deficit, excluding local councils, reached HUF 914.9 bln at the end of August, or 102.5% of the HUF 892.4 bln full-year target, the National Economy Ministry confirmed in a second reading of data today.

The deficit was up from HUF 858.8 bln for the same period a year earlier, a difference the ministry attributed to a HUF 369 bln decline in European Union funding. The ministry noted that, in addition to the usual year-to-year differences, the transfer of some funding had been held up due to a European Commission probe.

The EC interrupted the equivalent of €451 mln in payments for Hungarian projects a year ago, after an audit "revealed systemic weaknesses in the project selection system", MTI reported earlier. The funding was suspended in April of this year.

The ministry said in its release on Monday that the suspended funding would show up later on the general governmentʼs cashflow-based accounting, but would not affect the balance calculated according to the EUʼs accrual-based rules.

The full-year deficit target of 2.4% of GDP, calculated with EU rules, remains achievable, the ministry said.

In January-August, the central budget ran a HUF 980.2 bln deficit, while the social security funds and separate state funds had surpluses of HUF 33.7 bln and HUF 31.6 bln, respectively.

In August alone, the general government deficit came to HUF 20.8 bln, over the HUF 7.4 bln gap in the base period because of the early transfer of HUF 34.5 bln of social subsidies for the month of September with the aim of making the start of the school year easier for Hungarian families, the ministry said.