Gen gov't deficit near HUF 540 bln at end-Feb, ministry confirms

Government

Hungary's cash flow-based general government, excluding local councils, reached HUF 539.7 billion at the end of February, the Finance Ministry confirmed in a detailed release on Tuesday, according to a report by state news wire MTI.

The ministry said the deficit was the result of "measures taken so far and pandemic expenditures".

"The resources necessary for [pandemic] defense, such as the procurement of vaccines, and for restarting the economy continue to be available in the budget," the ministry added.

The central budget had a HUF 505.5 bln deficit and the social insurance funds were HUF 47.6 bln in the red, but separate state funds had a surplus of HUF 13.4 bln at the end of February.

The deficit swelled after running a HUF 198.8 bln surplus at the end of January.

The ministry noted that payouts for European Union-supported projects came close to HUF 481 bln in January-February, while transfers from Brussels reached just HUF 128.8 bln.

Hungary's government has been pre-financing EU-supported investments for years, a practice that impacts the cash flow-based deficit, but not the accrual-based deficit calculated according to EU accounting rules.

The ministry noted that expenditures in January-February included HUF 57.4 bln for road developments, HUF 50.7bn for competitiveness-boosting subsidies, HUF 42 bln for projects in the Modern Cities Program, HUF 38.8 bln for public transport projects and HUF 28.7 bln for the Healthy Budapest Program.

It added that spending was also impacted by the first tranche of an annual pensioners' bonus the government is reintroducing, the extension of a wage support program for businesses impacted by pandemic restrictions and the launch of a scheme that will raise the salaries of doctors over several years.

The detailed data show the pensioners' bonus added HUF 77.6 bln to expenditures.

The data also show a HUF 35.1 bln expenditure by the National Public Health Centre (NNK) in January-February, "mainly for the procurement of vaccine-related to the coronavirus pandemic"; HUF 24 bln in spending by the National Hospital Directorate, mostly for pandemic-related healthcare equipment; and HUF 9.1 bln at the National Blood Supply Service to procure COVID-19 tests.

Central budget debt rose by HUF 264.8 bln in January-February, lifted by HUF 254.4 bln in net forint issues. Additionally, net FX issues added HUF 90.6 bln to the debt, while the stronger forint shaved HUF 81.3 bln off the total.

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