Are you sure?

Hungary Q1-Q3 general government deficit 4.7% of GDP

Hungary ran an ESA95 general government deficit of HUF 945 billion or 4.7% of the period's GDP in the first three quarters of 2010, up HUF 128 billion or 0.5 percentage points of GDP from the same period of 2009, the Central Statistical Office (KSH) said based on national account statistics.

The deficit is HUF 128 billion more and half a percentage point higher in terms of GDP than in the same period a year earlier.

For Q3, the deficit came to HUF 190 billion or 2.8% of GDP during the period. The deficit was HUF 67 billion or 1.2 percentage point of GDP less than in the same period a year earlier.

The government targets a 3.8%-of-GDP deficit for the full year in 2010.

In Q1-Q3 2010, general government revenue rose 0.3% to HUF 8,795 billion from the same period a year earlier, and general government expenditures rose 1.0% to HUF 9,740 billion. The increases were under average the average inflation rate of 5.1% in January-September.

General government revenue was up 3.1% at HUF 2,984 billion in Q3 last year compared to the same period a year earlier. General government expenditures increased 0.7% to HUF 3,174 billion in Q3.

Revenue from taxes on production and imports rose 4.7% in Q3 from the same period a year earlier to HUF 1,153 billion. Most of the rise reflected a 5.2% increase in VAT payments, KSH said. VAT revenues rose even though the effect of a five-percentage-point increase in the main VAT rate fell out of the base period.

An extraordinary bank levy boosted revenue from capital taxes, causing it to jump to HUF 42.7 billion in Q3 from HUF 2.4 billion in Q2 and from HUF 5.4 billion in Q3 2009, KSH told Econews. (Financial companies paid about HUF 90 billion in the first installment of the tax due on September 30.) The levy also raised revenue from production taxes and, to a lesser extent, revenue from taxes on income taxes, which included both personal income tax and corporate tax, KSH said. The levy not only raised but also lessened corporate tax revenue through lessening the tax base.

Raising the profit threshold for companies eligible for a preferential 10% corporate tax rate also reduced revenue from corporate tax.

Revenue from income taxes fell 5.6% in Q3 from the same period a year earlier to HUF 545 billion. The only other revenue item to decline during the period was social security contributions, which were down 3.7% at HUF 768 billion.

Among expenditures in Q3, interest expenditures fell 8.2% to HUF 273.6 billion, and spending on social benefits (excluding in-kind transfers) fell 0.4% to HUF 1,040 billion. Government spending on wages was practically unchanged at HUF 694 billion.

Among spending items that grew in Q3, gross fixed capital formation or investments rose the most, by 20.1% to HUF 242 billion. Government current consumption also rose a sharp 14.2% to HUF 478 billion. Other expenditures fell 7.3% to HUF 447 billion.

Revenue items that declined notably in Q1-Q3 2010 included income taxes, dropping 16.7% to HUF 3,325 billion due lower corporate tax revenues, and social security contributions, down 7.9% at HUF 2,340 billion because of a big decline in employer contributions. Revenue from taxes on production and imports rose, in contrast, by 8.6% to HUF 3,325 billion, including HUF 1,790 billion in revenue from VAT. VAT payments rose 13.6% during the period.

Among expenditures in Q1-Q3 2010, interest expenditures declined 6.8% to HUF 839 billion. Spending on social benefits (excluding transfers in kind) also fell, by 1.1%, to HUF 3,155 billion. Among items showing an increase, gross fixed capital formation or investment spending rose the most, by 14.4% to HUF 551 billion. Government current consumption spending also grew over the rate of inflation, by 6.9% to HUF 1,497 billion. Hungary's general government spent HUF 2,165 billion on the compensation of its employees (wages, including taxes and benefits) in Q1-Q, just HUF 1 billion more than in the same period a year earlier. (MTI – Econews)