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FinMin expects HUF 135 billion Dec surplus

The Finance Ministry projects a HUF 135 billion general government surplus in December, bringing the full-year cash flow-based gap - excluding local councils - to 3.8% of GDP, in line with the respective target, state secretary Tamás Katona said on Thursday.

The general government ran a HUF 75.9 billion deficit in November, bringing the January-November deficit to HUF 1,123.7 billion or 4.3% of GDP, Katona said.

The January-November cash flow-based deficit, excluding local councils, was HUF 131 billion over the HUF 992.4 billion full-year target.

The central budget deficit was HUF 120.2 billion in November, the separate state funds had a deficit of HUF 10.4 billion and the social security funds had a HUF 54.7 billion surplus.

Revenue from taxes and contributions were in line with targets, although VAT generated more than expected and revenue from personal income tax was slightly under the target, Katona said. In December, corporate tax is expected to be slightly under the target, while VAT is seen exceeding the plan, he added.

Corporate tax revenue of HUF 165 billion has to arrive in December in order to deliver the ministry's corporate tax revenue forecast of HUF 418 billion for the full year, MTI calculated. The full-year projection for personal income tax is HUF 1,914 billion, of which HUF 214 billion has yet to arrive in December. VAT is seen generating revenue of HUF 2,130 billion for the full year, including HUF 109 billion in December. The main revenue items yet to materialize add up to HUF 488 billion.

Expenditures are in line with the target and spending of budget-funded institutions has been under that in the same month a year earlier since August, and the government still does not want to free up the HUF 78 billion in equilibrium reserves, Katona said.

The ministry targets a cash flow-based deficit of 4.1% of GDP with local councils, and an accrual-based (ESA95) deficit of 3.9%, including local councils.

Katona said the ministry believes Hungary is over the worst of the crisis, citing fresh GDP data.

Hungary's economy contracted 7.1% in Q3, slowing from a 7.5% drop in Q2, the Central Statistics Office (KSH) said on Wednesday.

The drop in GDP is likely to slow to 5% in Q4, bringing the full-year decline to 6.7%, Katona said. The ministry expects the economy to contract 0.6% in 2010, compared to an earlier projected contraction of 0.9%. Investments are seen rising 0.8%, compared to the earlier projected 0.6% rise, and inflation is set to reach 3.9%, down from the earlier projected 4.1%.

The ministry sees the current-account deficit narrowing to 0.5% of GDP, down from an earlier projected 3%. Next year, it will reach 1.5%, well under the earlier projection of 3.4%. (MTI-ECONEWS)