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General govʼt deficit reaches 3.9% of full-year target

Hungaryʼs general government, excluding local councils, ran a HUF 39 billion deficit at the end of April, some 3.9% of the HUF 998.4 bln target for the full year, the Ministry of Finance said in a preliminary reading of data on Thursday.

In the first four months of 2019, the central budget ran a HUF 80.7 bln deficit, but the social insurance funds had a surplus of HUF 8.6 bln and separate state funds had a surplus of HUF 33.1 bln, reported state news agency MTI.

The general government, excluding local councils, ran a HUF 102.9 bln surplus in April alone.

The figures compare to an April deficit of HUF 208.4 bln and a four-month deficit of HUF 1,081.4 bln in 2018.

The full-year accrual-based deficit target of 1.8% of GDP is achievable, and state debt could be reduced to below 70% of GDP, said Minister of Finance Mihály Varga.

The January-April deficit was in line with the governmentʼs expectations, the minister said, noting that the central budgetʼs position is stable and balanced due to the performance of the economy and to rising revenue despite tax cuts.

A steady rise in employment, coupled with rising wages, supports the expansion of retail consumption, Varga said.  He noted that revenue from VAT rose HUF 349.3 bln, revenue from personal income tax climbed HUF 55.5 bln, and revenue from payroll taxes increased HUF 160.9 bln from the corresponding period a year earlier.

The government has continued the pre-financing of EU-funded investments and this continues to impact the balance, Varga stressed. Payouts for such investments reached HUF 489.3 bln during the period, while transfers from Brussels came to just HUF 305.9 bln. 

The government also spent significant central budget funds to support developments within the framework of the Modern Cities Program, as well large corporate investments that expand capacity and create jobs, the minister noted.