Gov't postpones investments to reduce 2022 budget deficit

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Hungary's government has mandated a rescheduling of investments to save over HUF 755 billion next year, reducing the general government deficit target relative to GDP from 5.9% to 4.9%, state news wire MTI reports, citing a resolution published in the official gazette Magyar Közlöny.

In a statement released late Wednesday, the Finance Ministry said that Hungary's economy is expanding at one of the fastest clips in the European Union, and GDP growth is expected to be around 4-5% in the coming years.

"Thanks to a successful jump-start, Hungary's fiscal policy can return to the path of balance sooner than planned," the ministry said.

The ministry noted that the government decided early in December to postpone some investments this year, increasing reserves by HUF 350 bln, while reducing state debt relative to GDP.

The government's latest decision "improves next year's balance indicators, too", it added.

"By improving its balance indicators, Hungary can be better prepared facing risks in the global economy, while strengthening the country's financial stability and further improving its assessment by investors," the ministry said.

It added that fiscal reserves will increase in a way that makes resources available for an annual pensioners' bonus equivalent to a full month's pension, for a personal income tax rebate for families raising children, for a PIT exemption for under-25s, for a HUF 750 bln reduction in taxes on labor and for pay rises.

Prime Minister Viktor Orbán explained at a press briefing on Tuesday that next year's deficit target was reduced from 5.9% to 4.9% to keep the gap around the expected average for EU member states.

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