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Hungary's fiscal deficit preliminary Ft 34 bln down on forecast

Hungary's preliminary fiscal deficit was Ft 216.9 bln (€0.85 bln) in February after Ft 196.1 bln in January, the Finance Ministry announced on Tuesday.

The February figure, which is cash-flow based and excludes local councils, is Ft 34.36 billion under the Finance Ministry's deficit forecast of Ft 251.26 billion, published on February 15. General government deficit was Ft 413.1 billion (€1.6 billion) in the first two months of the year as compared to the ministry's Ft 447.4 billion forecast last month.

The general government deficit of the first two months reached 1.6% of GDP, 0.2 percentage points lower than the projected 1.8% ratio. The ratio compares to a 6.6%-of-GDP cashflow based fiscal deficit target, excluding local councils, for the year. The two-month deficit was Ft 12.4 billion below a respective deficit of Ft 435.5 billion in January-February last year. The central budget deficit was Ft 259.8 billion February, down almost Ft 10 billion from the ministry's Ft 269.3 billion forecast.

The two-month central budget deficit of Ft 507.6 billion equals to 32.3% of the full year target. The social insurance funds registered a preliminary surplus of Ft 25.8 billion last month, Ft 18.2 billion more than the projected Ft 7.6 billion surplus. The funds had a surplus of Ft 51.9 billion in the first two months, and targeted to close the year with a deficit of Ft 27.5 billion. Separate state funds also registered a more than projected surplus of Ft 17.1 billion in February, and they had a two-month surplus of Ft 42.6 billion as against an annual targeted surplus of Ft 16 billion.

Hungary's Budget Act targets a Ft 1,688 billion full-year cash flow-based fiscal deficit, excluding local councils, in 2007, or 6.6% of GDP. The act limits the primary deficit to Ft 568 billion, or 2.2% of GDP. The latest forecast of the Finance Ministry published in February shows a Ft 106 billion lower deficit, of which Ft 86 billion is expected to come from a lower primary deficit. The cashflow-based general government deficit was Ft 2,033.8 billion in 2006, equivalent to 8.7% of estimated GDP. (Bloomberg)