MNB improves 2014 fiscal deficit forecast below gov’t target

Analysis

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The National Bank of Hungary (MNB) forecasts Hungary’s 2014 ESA general government deficit at 2.5% of GDP if reserves set aside in the so-called Country Protection Fund remain unspent, the bank said in its newly-published Inflation Report...

The forecast is down 0.4% from the projection in the previous Inflation Report published in September, and is 0.4% lower than the government’s target of 2.9% of GDP. The MNB left the 2013 deficit projection, calculated on the same assumption, unchanged at 2.6% of GDP, slightly below the 2.7%-of-GDP target for the year.

The MNB said its more optimistic deficit projection for 2014 is based on three factors: These are the freeze of the Country Protection Fund, worth 0.3% of GDP, already assumed in the September report; 0.4%-of-GDP higher revenue from wage-related contributions; and an assumed 0.1%-of-GDP less expenditure with less demand for budget-provided self-funding necessary for EU-funded projects.

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