MNB projects deficit on target for next year

Analysis

National Bank of Hungary projects Hungary's general government deficit, calculated with European Union accounting rules, will reach the 2.4%-of-GDP government target next year, if available free reserves are cancelled, the central bank said in a report on Thursday.

The projection was lowered from 2.6% in the previous quarterly Inflation Report and was down from 2.5% in an analysis published in November based on the 2015 budget bill, which has since been approved by lawmakers.

The MNB said the "cyclical component" of the gap would be equivalent to half a percentage point next year, but would decline to just 0.1 percentage point in 2016.

The central bank acknowledged the contribution of both lower-than-expected increases in budget expenditures as well as the pick-up in economic growth to the improved balance.

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