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Hungary budget deficit may peak mid-year, ministry official says

Hungary’s budget deficit, which reached 81.4 percent of the full-year goal in February, may peak in the middle of the year, deputy state secretary at the Economy Ministry Benő Péter Banai said.

Revenue from extraordinary industry taxes and the effective nationalization of private pension funds will flow into the budget in the second half of the year, especially near the end of 2011, Bloomberg reported citing Banai’s website.

Hungary, which targets a budget shortfall of 2.94%  of economic output this year, is relying on extraordinary taxes on energy, finance, retail and telecommunication companies as well as on pension fund portfolios to make up for lost revenue from the introduction of a flat personal income tax and the reduction of the corporate tax rate.

The government earlier this month unveiled spending-cut plans for the next three years to make budget financing sustainable and avert having its credit rating, currently the lowest investment grade at all three major rating companies, being lowered to junk.