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March fiscal deficit Ft 91 bln over FinMin forecast

Hungary's general government deficit was Ft 353.7 billion (€1.33 billion) in March, Ft 91.1 billion over the Finance Ministry's forecast of Ft 262.6 billion, the ministry announced on its website late on Monday. The figure is cash-flow based and excludes local councils.

In January-February, the general government deficit was Ft 435.5 billion, up Ft 41.6 billion from the same period a year earlier. The ministry targets a whole-year deficit of Ft 1,545.8 billion, or 6.6% of GDP.
Deficit in the first quarter was Ft 789.2 billion, Ft 304.3 billion more than in the same period last year. The ministry earlier put the first-quarter deficit at Ft 698 billion, or 3% of GDP. The ministry explained the higher-than-targeted deficit citing one-off expenditures and expenditures related to the accelerated implementation of EU-supported projects for which the central budget pays the EU funding in advance and is later reimbursed. These payments will not influence the full-year budget position, the ministry said. Among the one-off expenditures were bonus payments to pensioners equivalent to two week's extra pension transferred in March. In addition to funding for EU-subsidized projects, the ministry paid in advance area-based land subsidies for farmers, an item for which it will also later be reimbursed from the EU budget.
The ministry noted that it had started paying refunds on personal income tax returns from March 1, but individuals who are not eligible for a refund are expected to wait until the May 20 deadline to file their returns. The reduction in the main VAT rate from 25% to 20% at the start of the year also generated less budget revenue, because refunds were based on the higher rate in the first quarter, but new payments were calculated at the lower rate.
The central budget deficit was Ft 242.1 billion in March, up Ft 76.5 billion from the Finance Ministry's forecast. The quarterly deficit came to Ft 682.7 billion, well over the target of Ft 606.2 billion. The three-month deficit in the social insurance funds was Ft 126.1 billion, also over the Ft 117.4 billion target.