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Hungary ESA general gov't deficit preliminary 4.0% of GDP in Q1

Hungary had a ESA95 general government deficit of HUF 282.3 billion or 4.0% according to preliminary national account figures, Central Statistics Office (KSH) said based on preliminary figures on Monday.

The deficit fell by HUF 155 billion or by 2.3percentage points of GDP from Q1 2011 if the effect of assets transfer from private pension funds to the state was excluded, KSH said.

Excluding the pension assets transfer, revenues rose 7.2% in the first quarter from a year earlier to HUF 3,016.5 billion. Expenditure rose 1.4% yr/yr to HUF 3,298.8 billion.

Q1 revenues from income taxes rose 10.6% yr/yr to HUF 454 billion mainly due to the elimination of the former personal income tax preferences in the lower wage categories, KSH said.

Revenue from production and import taxes rose 8.4% from twelve months earlier to HHUF 1,147.3 billion, including a 7.4% rise in the revenue from VAT to HUF 591.4 billion, the main rate of which was raised from 25% to 27% as of January 1, 2012.

Capital taxes brought in 8.5% more at HUF 38.1 billion as the refunds to banks from the extraordinary bank levy related to their losses on preferential exchange-rate early fx repayment scheme happened after the quarter was closed.

Revenue from social security contributions rose 3.2% yr/yr to HUF 920.1 billion, at a relatively slow rate despite an increase in the contribution starting January. The slower growth could reflect some drop in employment in the period as well as tax writoffs due to employers to foot part of the cost to prevent a drop in nominal net wages due to the elimination of the preferences in low to average wage categories.

Excluding the pension assets transfer, worth HUF 2,682.7 billion, from the base, other revenue rose 9.1% to HUF 457.0 billion.

Among expenditure, investment expenditure rose the most, by 11.1% to HUF 126.9 billion, and rose in the category of "other spending" 4.9% to HUF 619.8 billion.

Spending on current government consumption fell a slight 0.3% yr/yr, remaining slightly under HUF 500 billion, as did spending on government sector wages which fell 0.5% to 676.3 billion in Q1. Spending on social support and benefits rose a slight 0.7% to HUF 1,084.5 billion. And interest expenditure rose just 0.6% yr/yr to HUF 294.9 billion.