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Hungary general gov’t deficit 17.9% of full-year target in January

Hungary had a cashflow-based general government deficit, excluding local councils of HUF 122.8 billion in January or 17.9% of the full-year target, the National Economy Ministry said.

The central budget ran a HUF 110.8 billion deficit and the social insurance funds were HUF 37.9 billion in the red, but separate state funds had a HUF 25.9 billion surplus.

The ministry noted that revenue from personal income tax was HUF 36 billion under that in the same month a year earlier because of changes to the tax law effective January 1, 2011, including lower tax rates and bigger write-offs. Taxes paid in January on year-end bonuses for public sector workers were lower because the bonuses were “reduced to a minimal level”, while many bonuses in the private sector were paid in January, and personal income tax on these will arrive only in February, the ministry said. The same factors as well as changes in regulations also affected revenue from payroll tax, it added.

On the expenditure side, spending targets managed by ministries, which includes co-financing for European Union-supported investments, more than doubled from the same month a year earlier to HUF 210.2 billion. Within the figure, expenditures on EU-supported programs nearly tripled as the state spent more to avoid losing the EU monies, the ministry said. Co-financing for EU-supported projects will be higher than in 2010 for the whole year for the same reason, the ministry added.

A HUF 6.8 billion item for “international membership fees” was booked and paid out in January 2011 as the amount was not included in the 2010 budget by the previous government, the ministry said.

The state paid out HUF 9 billion on guarantees in January, mostly because of a one-off, unplanned payment of HUF 7.1 billion related to the Vértesi power plant, the ministry said.

Interest expenditures in January rose by HUF 13.2 billion over the same month a year earlier mainly because of a differing time schedule of the payments. The fact that government securities yields were an average weighted 15 bp higher and state debt was about 5% higher than in January 2010 explained an insignificant part of the increase, the ministry said. (MTI – Econews)