Deficit-to-GDP ratio 1.1% in Q1 2018

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The general government sector closed the first quarter of 2018 with a deficit of HUF 115.5 billion, equivalent to 1.1% of GDP, preliminary data from the Central Statistical Office (KSH) show. The balance deteriorated by HUF 402.3 bln, or 4.2 percentage points as a proportion of GDP compared to Q1 2017, when the government sector ran a 3.1%-of-GDP surplus.

The deficit widened as the increase in expenditures outpaced revenue growth, the KSH said. In the first quarter of 2018, compared to Q1 2017, the general government sector’s revenues amounted to HUF 4.1577 trillion, while expenditures totaled HUF 4.2732 tln.

Revenues grew by HUF 241.7 bln, or by 6.2%. Revenues from taxes on income rose by HUF 60.3 bln (up 9.5%). Taxes on production increased by HUF 138.4 bln (up 9.0%), within which VAT revenues rose by HUF 80.6 bln (up 10.1%). Social contributions were HUF 65.8 bln (5.7%) higher than a year earlier. Other revenues, consisting mainly of EU transfers, decreased by HUF 24.0 bln, or by 4.2%.

Expenditures increased by HUF 644.0 bln, or by 17.7%. The growth in the case of paid compensation of employees was HUF 118.8 bln (up 12.3%) and regarding gross fixed capital formation HUF 29.3 bln (up 12.9%). Intermediate consumption rose by HUF 47.4 bln (up 9.2%), while social benefits other than social transfers in kind rose by HUF 63.6 bln (up 5.5%).

Other expenditures, consisting mainly of current and capital transfers, the bulk of which is central budget co-funding to EU funding, increased by HUF 404.7 bln (up 80.9%). At the same time, interest expenditures of the general government sector decreased by HUF 19.8 bln (down 7.2%).

Hungaryʼs GDP grew an unadjusted 4.4% year-on-year in Q1 2018, according to state news wire MTI. Consumer prices were up 2.0% and industrial producer prices rose 3.6% in the period, it added.

Data for the balance of the general government sector in the second quarter of 2018 will be published by the KSH on October 2.

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