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Hungary general govt deficit 5.4% over full-year target in May

Hungary's general government deficit, excluding local councils, reached HUF 724.2 billion in January-May or 105.4% of the full-year target, the National Economy Ministry said on Tuesday.

The general government ran a HUF 58 billion deficit in the month of May, the ministry said. The central budget deficit came to HUF 40.1 billion for the month and the social security funds showed a HUF 24.4 billion gap, but separate state funds ran a HUF 6.5 billion surplus.

The ministry confirmed Hungary will meet the government's ESA 2.94% deficit target and attributed the high pro-rata deficit in January-May to the timing of revenue and cost-savings.

The ministry noted that HUF 528.8 billion in revenue from assets in private pension funds would be transferred only in the second half of the year. Likewise, HUF 250.3 billion in fiscal savings measures will reduce the deficit mainly during the rest of the year, it added.

The ministry also confirmed its earlier forecast that the deficit will reach 176.1% of the full-year target by the end of June before falling to 144.0% by the end of September and finishing the year on target.

The ESA deficit target is calculated without the effect of the transfer of private pension fund assets of Hungarians returning to the state pension pillar. It also excludes the takeover of the debt of transport companies MÁV and BKV and the planned buyout of public private partnerships (PPPs). Including these factors, Hungary's updated convergence program projects an ESA surplus of 2.0% of GDP for 2011.

If the January-May deficit is adjusted for the pro rata amount of revenue from private pension fund assets, the gap would be HUF 503.9 billion or 73.3% of the full-year target, the ministry said.