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MNB revises 2016 deficit forecast in line with budget target

The National Bank of Hungary revised its projection for next yearʼs general government deficit to 2.0% of GDP in its quarterly Inflation Report published today, in line with the target in the budget.

In the previous report, published in June, the MNB put the deficit at 2.2%, because it was "not aware of any actual government plans" on a HUF 133 bln revenue item from "other asset sales and utilization".

The MNB said it had revised its forecast mainly due to the governmentʼs announcement in August that it would initiate the sale of at least 300,000 hectares of state-owned farmland this year.

"The sale of state-owned land may bring a significant revenue surplus, in addition to the value of HUF 133 bln of the revenues from other asset sales and utilization related to state property included in both the Budget Act and our baseline scenario," the MNB said in the report.

It added that fiscal spending to address the migrant crisis could cause additional budget expenditures in 2016.

The MNB noted that its forecast assumes the cancellation of the full amount of reserves in the National Protection Fund, which would improve the balance by 0.2% of GDP.