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August budget deficit lower than expected

Hungary, the European Union member with the largest budget deficit compared with the size of the economy, said the shortfall in August was narrower than expected after it collected more tax revenue. The August budget deficit was Ft 134.9 billion, compared with a government forecast of Ft 167.1 billion, the Budapest-based Finance Ministry said in a faxed statement yesterday. That increased the eight-month shortfall to Ft 1.39 trillion or 78.4% of the annual target. Prime Minister Ferenc Gyurcsány, struggling to reduce the shortfall, pledged to raise taxes, boost regulated energy and drug prices and cut government jobs to raise state income and cut government expenditure. Hungary had a budget surplus of Ft 33 billion in July compared with a government forecast of Ft 7.8 billion, as state income from taxes was higher than expected, the Finance Ministry said Aug. 17. The government revised its target for the annual cash-flow budget deficit to Ft 1.77 trillion from Ft 1.55 trillion in June. Hungary's program on adopting the euro, submitted to the European Commission on Sept. 1, forecasts deficit by EU standards to decline to 3.2% of gross domestic product by 2009 from 10.1% of GDP projected for this year. (Bloomberg)