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Hungary says November budget deficit narrower than expected

Hungary, which has the European Union's widest budget deficit, said the shortfall in November was narrower than expected as fiscal revenue from higher taxes exceeded the government's goal.

The November gap totaled Ft 191.5 billion ($1 billion), compared with a government forecast of Ft 230.4 billion, the Budapest-based Finance Ministry said in a faxed statement yesterday. That increased the 10-month shortfall to Ft 1.7 trillion or 82.7% of the revised annual target. Prime Minister Ferenc Gyurcsány has raised taxes and cut subsidies to trim the shortfall, which the government wants to limit to 10.1% of GDP this year.

The premier on October 26 said tax receipts outperformed forecasts. „Tax revenue that arrived after the 20th of this month shows that the revenue expected for this month is coming in, maybe even a pinch more,” Gyurcsány said. „For the first time in months, what we planned is happening on both the spending and the revenue side of the budget.” The cash-flow figures released today are a snapshot of the country's budget balance, measuring the immediate difference between revenue and expenditure in a given month. It is different than the measure monitored by the EU, which also includes other items, such as debt and guarantees in the books and will be determined later.

The government maintained its forecast for the EU-standard figure at 10.1% of gross domestic product at the end of the year. Hungary on November 16 revised its annual cash-flow deficit forecast to reflect the government assuming over Ft 350 billion of debt from the country's highway management company and accounting for it in this year's book. Most of that will appear in the December balance, which would be near break-even without the added debt, said István Várfalvi, the state secretary in charge of budgeting at the Finance Ministry. (Bloomberg)