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Hungary general govt deficit 130.4% of full-year target in August

Hungary's cash flow-based general government deficit, excluding local councils, reached HUF 1,544.6bn in January-August, or 130.4% of the modified full-year target, the National Economy Ministry said in a second reading published on Thursday.

The figures were the same as in the preliminary report published on September 7.

In spite of the pro-rata overshoot, the ministry said it would still meet the modified target for the full year.

The ministry said that it intends to omit the effect of the state's purchase of a 21.2% stake in Hungarian oil and gas company MOL for €1.88bn in a deal announced in May from annual comparisons because it classifies it as a one-off item.

Hungary's Parliament recently modified the full-year deficit target to HUF 1,184.2bn from HUF 687.4bn, because of the purchase of the MOL stake in a deal announced in May.

The ministry modified its projection for the third quarter of the year. It expects the deficit will reach HUF 1,608.7bn, or 135.8% of the full-year target by the end of September before finishing the year at 100.0% of the full-year target. It projects the general government will have a deficit of HUF 574.1bn in the third quarter and a surplus of HUF 424.5bn in the fourth quarter.

In a breakdown of the general government, the ministry said the central budget ran a HUF 1,384.3bn deficit in January-August. The gap for the social insurance funds reached HUF 247.3bn, but separate state funds had a surplus of HUF 87.0bn.

In August alone, the general government had a HUF 50.1bn deficit. The central budget deficit came to HUF 16.8bn and the social insurance funds were HUF 34.9bn in the red, but separate state funds had a HUF 1.6bn surplus.

The deficit targets are calculated excluding the effect of the transfer of private pension fund assets of former fund members, to be accounted as revenue under ESA, and without expenditures of the takeover of the debt of transport companies MAV and BKV and the planned buyout of public private partnerships (PPPs).

Under a government decree published on August 5, the state will take over up to HUF 300bn of debt from state-owned railway company MAV and up to HUF 78bn of debt from the capital's local transport company BKV. In the same decree, the government limits spending to end public-private partnerships (PPPs) to HUF 200bn.