Gen gov't deficit over HUF 1.144 tln at end-March


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Hungary's cash flow-based general government, excluding local councils, reached HUF 1.144 trillion at the end of March, the Finance Ministry said in a preliminary release of data on Friday, according to a report by state news wire MTI.

The deficit widened from HUF 539.7 billion at the end of February.

The ministry said the gap grew as a result of "pandemic defense, ensuring the procurement of vaccine and measures that serve the economic recovery".

"Government measures effectively support the preservation of workplaces, and the support of investments necessary for the economic recovery also have a key role," it added.

The central budget ran a HUF 943 bln deficit at the end March, while the social security funds had a deficit of HUF 182.7 bln and the separate state funds were also HUF 18.4 bln in the red.

The ministry said revenue was "significantly influenced" by the economic impact of the pandemic and employer preferences introduced to mitigate that impact, as well as by a two-percentage-point reduction in the payroll tax to 15.5% and higher payroll volume.

The ministry noted that payouts for European Union-supported projects came to HUF 615.6 bln in January-March, while transfers from Brussels reached just HUF 150.6 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.

State spending on pandemic defense reached HUF 342.8 bln in January-March, the ministry said, adding that the government had extended wage support and payroll tax preferences for sectors hard hit by pandemic restrictions through April. 

The ministry said the March balance was also affected by HUF 32.1 bln in family support for April that was paid at the end of the month, ahead of the Easter holiday.

The ministry said amendments to the 2021 budget could be submitted to lawmakers during the spring session in light of "decisions taken during the state of emergency, changed circumstances and the aim of jump-starting the economy", adding that a new deficit target of 7.5% of GDP, calculated according to EU rules, would be necessary.

"It is necessary for fiscal resources for pandemic and economic recovery measures to be ensured in a manner that allows state debt [relative to GDP] to be reduced," the ministry said.


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