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Hungary Q3 general government deficit 1.0% of GDP

Hungary ran a ESA'95 general government deficit of HUF 65.5 billion (€246 million), or 1.0% of quarterly GDP in Q3 2008, sharply down from 3.4% of GDP in the same period a year earlier, and down from 2.6% of GDP in Q2 2008, the Central Statistical Office (KSH) said on Tuesday, based on national account (ESA'95) statistics.

The deficit in the first nine months of 2008 came to HUF 409.8 billion, or 2.1% of GDP. Hungary's Finance Ministry projects the 2008 full-year general government deficit at 3.4% of GDP, down from 5.0% of GDP in 2007.

The nine-month deficit fell HUF 355.4 billion from a year earlier and the deficit ratio was 2.0 percentage-point lower than in the first nine months of 2007.

KSH revised the Q1 and Q2 deficits and deficit ratios up from the previous readings. It raised the Q1 2008 deficit from 2.4% to 2.6% of the quarterly GDP, and revised the Q2 2008 deficit also to 2.6% of GDP from 2.1% in the first reading released on October 1. The Q3 2007 deficit ratio was brought slightly down from 3.5% to 3.4% of the period's GDP.

In nominal terms, the Q3 deficit fell HUF 150 billion compared to Q3 2007 as a result of a dynamic growth of revenues and a slight rise of expenditure, KSH said.

General government revenues rose 5.3% from a year earlier to HUH 2,993.8 billion in Q3 and expenditure stayed practically unchanged at 3,059.3 billion.

Q3 revenues from income taxes rose the most, by 8.3% to HUF 687.5 billion, followed by a 6.1% rise in social security contributions, to HUF 896.7 billion. Revenue from taxes on production and imports rose on the whole at a below-average rate of 4.7% to 1,048.1 billion, but VAT revenues were up a sharp 8.7%, rising to HUF 519.9 billion in Q3.

Among Q3 general government expenditure, social benefits, excluding transfers in kind, rose a sharp 9.7% yr/yr, to HUF 985.9 billion, above the twelve-month CPI, slowing from 6.7% in July 2008 to 5.7% in September. Interest expenditure also rose a sharp 7.2% to HUF 277.9 billion.

Gross fixed capital formation (investments) fell a sharp 14.7% yr/yr in Q3 2008, to HUF 168.3 billion. General government expenditure on the compensation of employees stayed practically level at HUF 728.8 billion.

Nine-month general government revenues rose 7.8% to HUF 8,937 billion, mainly on a sharp 11.4% rise in revenue from income taxes.

General government expenditure in the first nine months of 2008 rose 3.2% to HUF 9,346.8 billion. Among changes in spending, KSH noted a sharp 9.8% rise of social benefits, excluding transfers in kind. General government investments fell sharply as gross fixed capital formation in the first nine months of 2008 was down 25.9% at HUF 452.6 billion. (MTI – Econews)