Hungary’s budget is expected to post a deficit of Ft 219.8 billion ($1.22 billion) in February after a surplus in January, the Finance Ministry said on Tuesday.
“According to our projection, the budget will produce a deficit of 219 to Ft 220 billion in February,” Finance Ministry Head of Department Ferenc Batho told a news conference. The ministry set the precise forecast at Ft 219.8 billion in a printed version of its projections. In January, the budget had a surplus of Ft 33.8 billion excluding local governments as higher-than-expected revenues in social security funds and independent government funds offset a deficit in the central government budget. For the Q1, the ministry cut its cash-flow deficit forecast to Ft 569.17 billion from its January projection for 581.51 billion, as it expected the trends, which produced the January surplus to run into the Q1.
However, Batho said the ministry saw no reason to update its guidance for a full-year deficit of Ft 1,111.17 billion or 4% of gross domestic product. “The facts seen in January do not warrant a change to the full-year forecast,” Batho said. He said buffer reserves of about Ft 100 billion to prevent a deficit overshoot may not be spent and the government also did not take into account extra revenues from tighter checks on the grey economy when it drew up this year’s budget.
On Monday, Prime Minister Ferenc Gyurcsány said the budget deficit this year may fall below the 4% target set in Hungary’s euro convergence plan. The deficit came in at about 5.7% of the economy last year, down from 9.2% in 2006, the biggest in the European Union. (Reuters)