Are you sure?

Economy Ministry confirms Hungary Jan-Nov general govt deficit at 82.3% of modified target

Hungary had a cash flow-based general government surplus, excluding local councils, of HUF 79.9bn in November, bringing the January-November deficit to HUF 1,247.9bn, or 82.3%, of the modified full-year target, the National Economy Ministry said on Thursday, confirming a preliminary report released on December 7.

The ministry projects the full-year deficit to be fully in line with the modified target of HUF 1,517.1bn. The projection translates into a December deficit of HUF 269bn.

The ministry’s statement did not say whether its projections include an estimated HUF 255bn in VAT refunds the state must pay under a ruling by the European Court.

Parliament recently raised the full-year deficit target by HUF 333bn to HUF 1,517.1bn to reflect a HUF 64bn debt takeover from state-owned railways MAV, a HUF 60bn capital injection to the state-owned development bank MFB, and a planned debt takeover from county local councils.

A previous budget amendment passed in the summer already raised the deficit target from the original HUF 687.4bn to HUF 1,184.2bn, mainly to reflect among expenditures the state’s purchase of a 21.2% stake in Hungarian oil and gas company MOL for EUR 1.88bn in July.

The ministry said HUF 219.2bn in realised revenue from the Pension Reform and Debt Reduction Fund contributed significantly to the surplus in November.

The Pension Reform and Debt Reduction Fund was set up from the assets of private pension funds transferred to the state earlier this year after members left the funds for the state pension system.

The general government is yet to receive HUF 110bn from the former private pension fund assets in December as the 2011 budget act includes a total of HUF 528.8bn revenue from these assets for the full year.

Adjusted for the pro-rata effect of revenue from private pension fund assets, revenue from extraordinary sectoral taxes, and excluding the purchase of the MOL stake as a one-off item, the January-November deficit reached 123.2% of the original full-year target, the ministry said.

In a breakdown of the general government, the ministry said the central budget ran a HUF 1,296.3bn deficit in January-November. The gap for the social insurance funds reached HUF 30.2bn, but separate state funds had a surplus of HUF 78.6bn in the first eleven months.

In November alone, the central budget had a deficit of HUF 39.2bn, the social insurance funds had a surplus of HUF 120.7bn and the separate state funds had a deficit of HUF 1.6bn.

Among the biggest revenue sources, revenue from VAT totalled HUF 2,222bn or 89.3% of the annual target in the first eleven months. Revenue from excise duties at HUF 782bn or 88.7% also fell short of the pro-rata target.

Eleven-month corporate tax revenue, at HUF 201.4bn reached just less than 70% of the annual target.

Financial institutions paid HUF 144bn in the extraordinary bank levy, part of which is due in December, as against a yearly target of HUF 187bn.

Revenue from the so-called crisis taxes, extraordinary taxes levied on the telecom, retail and energy sectors, at HUF by the end of November, as slightly over the HUF 161bn annual target.