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Ministry confirms Hungary Jan-Feb gov't deficit

Hungary's general government, excluding local councils, reached HUF 286.6 billion at the end of February or 49.7% of the target for the full year, the National Economy Ministry said on Thursday, confirming a first reading released on March 7.

The two-month deficit was in line with expectations, and will follow a pattern similar to the previous years, deputy state secretary Péter Benő Banai said in response to questions at an online press conference on Thursday.

The general government deficit will rise to or even over the full-year target in the first half. This will be followed by a near-balance position in the remainder of the year, resulting in the targeted 2.5% of GDP deficit ratio for the full year, Banai said.

The deficit for February was HUF 393.9 billion.

The figures compare to an annual cash flow-based deficit target of HUF 576.2 billion for the central government in the 2011 Budget Act. 

The January-February deficit was little more than half of the respective 2011 shortfall in nominal terms, but was up from the 32.3% ratio in January-February 2011. 

The ministry noted, that, if corrected for one-off items, the two-month deficit reached HUF 294.3 billion or little less than one-third of the corrected annual target. Both the nominal value and the ratio was down from a year earlier.

The February deficit of the central government was the result of a HUF 404.5 billion shortfall of the central budget. The social security funds registered a HUF 3.7 billion deficit and the separate state funds had a HUF 14.3 billion surplus in February.

In the first two months of 2012, the central budget had a HUF 319.3 billion deficit, reaching 53.8% of the respective full-year target. The social security funds registered a two-month deficit of HUF 2.2 billion or 6.2% of the respective annual target. Separate state funds had a surplus of HUF 34.9 billion in January-February or two-thirds of their annual target.

Hungary's updated convergence plan will contain the specific measures necessary to deliver the deficit targets for 2012 and 2013, Banai said, adding that the HUF 130 billion-140 billion savings recently outlined by state secretary Zoltan Cséfalvay for 2012 matched the figures in the European Commission's calculations.

The government's intention is fully in line with the Commission's expectations to keep this year's deficit at most at 2.5% of GDP, the deputy state secretary said.