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Hungary general govt deficit at 87% of revised full-year target in June

Hungary's cash flow-based general government deficit, excluding local councils, reached HUF 1,034.6 billion in January-June or 87.4% of the revised full-year target, the National Economy Ministry said on Thursday.

The full-year target was modified to HUF 1,184.2 billion, the ministry said.

The target was changed from HUF 687.4 billion earlier, showing the state's €1.88 billion purchase of a 21.2% stake in MOL from Russian peer Surgutneftegas in a deal announced in May.

The ministry revealed the modified target as a projection in the second reading of the May general government report, but Parliament did not approve the amount as a target until late June.

Adjusted for the pro rata effect of assets transferred to the state Pension Reform and Debt Reduction Fund from pension funds, the January-June deficit would be reduced to HUF 770.2 billion, or 65% of the full-year target, the ministry said.

The transfer of the assets to the fund was completed by the middle of June, but the HUF 528.8 billion revenue due to the budget under the 2011 Budget Act will not be booked until the second half of the year, the ministry said.

The ministry noted that the HUF 1,034.6 billion January-June deficit was HUF 41.6 billion under its HUF 1,076.2 billion projection for the period because of government cost-saving measures.

The central budget ran a HUF 907.4 billion deficit in January-June and the social insurance funds showed a HUF 188.7 billion gap, but separate state funds had a HUF 61.5 billion surplus.

The general government ran a HUF 310.4 billion deficit in the month of June. The central budget had a HUF 280.7 billion deficit and the social insurance funds were HUF 34.9 billion in the red, but separate state funds had a HUF 5.2 billion surplus.

The ministry projects the deficit will reach HUF 1,479.7 billion or 125% of the full-year target by the end of September before finishing the year at 100% of the full-year target.

The deficit targets are calculated without the effect on expenditures of the takeover of the debt of transport companies MÁV and BKV and the planned buyout of public private partnerships (PPPs).

In a detailed review of June, the ministry said net interest expenditures fell by HUF 13.6 billion to HUF 125.6 billion from the same month a year earlier because of a reduction in state debt.

Government securities transferred from the private pension assets and withdrawn caused interest expenditures to drop by HUF 8 billion in June, it said. Average yields were about the same as a year earlier, it noted.