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FinMin puts 2008 ESA ‘95 deficit at 3.3% of GDP

  The Finance Ministry estimates Hungary’s accrual-based general government deficit, including local councils, was 3.3% of GDP plus or minus 0.2 percentage point, state secretary László Keller said on Tuesday, confirming figures Finance Minister János Veres told foreign journalists a week earlier.

A final figure will be announced in the autumn.

Adjustments for pension reform reduce the deficit 0.6 percentage point, which bring the deficit under the 3% Maastricht criterion for adopting the euro, Keller said.

Excluding local governments, Hungary posted a cash flow-based general government surplus of HUF 68.6 billion in December, bringing the annual deficit to HUF 907.1 billion or 3.3% of GDP, Keller said. The figures are the same as preliminary ones published on January 8.

The annual cash flow deficit ratio is slightly lower than a 3.4%-of-GDP deficit projected in the middle of December.

The annual deficit fell well below the original 4%-of-GDP target, partly on better-than-projected revenues during most of the year and partly due to government measures, taken after the global financial crisis hit Hungary in October, which cut the 2008 deficit by 0.4% of GDP, the state secretary said.

Keller noted a HUF 144.1 billion primary surplus registered last year, which is a HUF 512 billion improvement on 2007. 2008 growth will come in below the 1% projection, he said.

December revenues were already affected by the global economic crisis, he said, noting that corporate tax revenues fell HUF 40.1 billion and VAT revenues were HUF 9.8 billion down on the ministry’s projections. Revenues from personal income tax were, in contrast, HUF 8.8 billion up on projection, and revenue from the extra 4% corporate tax surpassed the forecast by HUF 10 billion in December.

Keller did not wish to comment on journalists questions regarding an upcoming modification of this year’s budget. He only said that the EU projected Hungary’s GDP to contract 1.6% in this year in its latest forecast released on Monday.

The projection is lower than the 0.9% contraction on which the budget was based but is identical to the government’s alternative, pessimistic scenario in the December update of the convergence program, he said.

The Finance Ministry will consider several domestic and international projections before making a proposal to any eventual amendment to tax laws, Keller said. (MTI-Econews)