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Ministry forecasts HUF 96.6 bln fiscal deficit for April

Hungary's Finance Ministry forecasts a HUF 96.6 billion general government deficit, without local councils, in April, following a deficit of HUF 566 billion in the first quarter.

The ministry projects a HUF 892.7 billion deficit or 3.4% of GDP in the first half and expects a HUF 155 billion surplus in H2. The ministry targets a full-year deficit of 2.8% of GDP. The forecast would bring the January-April fiscal deficit to 2.5% of GDP.

The ministry puts the H1 central budget deficit at HUF 791.7 billion, but sees the full-year deficit falling to HUF 639.4 billion. It projects the social insurance funds deficit will narrow from HUF 112.9 billion in H1 to HUF 102.5 billion by year-end. The ministry projects a primary balance deficit of HUF 228.7 billion in H1, but a full-year surplus of HUF 474.9 billion.

The ministry sees full-year VAT revenue reaching HUF 2,138.8 billion, down a slight HUF 63.4 billion from the previous forecast a month earlier because of the deeper than expected recession and in spite of announced plans to raise the main VAT rate from 20% to 25%. The ministry reduced its targets for budget revenue from corporate taxes by HUF 40 billion to HUF 1,159.6 billion for the full year and from personal income tax by HUF 16 billion to HUF 1,985.8 billion.

The ministry lowered its pension spending forecast by HUF 100 billion from the previous forecast, probably because of the government's announcement it would scrap the second installment of pensioners' annual bonuses. The target for full-year interest payments of the central budget was raised by HUF 32.4 billion to HUF 1,211.9 billion. The target for budget subsidies for local councils was cut by HUF 35 billion, while the spending target for budget-funded institutions was reduced by around HUF 8 billion.

The April fiscal deficit is expected to come from a HUF 34.1 billion gap in the central budget, down for seasonal reasons from HUF 293.5 billion in March. The deficit in the health and pension funds is seen jumping from HUF 11.9 billion in March to HUF 60 billion as April wages are paid at the end of the month, rather than at the beginning of May, because of the May Day holiday. (MTI – Econews)