Varga submits 2017 budget bill, targets HUF 1.166 tln deficit

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(Photo: MTI/Tamás Kovács)

Hungaryʼs general government is expected to run a cashflow-based deficit of HUF 1.166 trillion next year, the 2017 budget bill, submitted to Parliament late yesterday by National Economy Minister Mihály Varga, shows, according to Hungarian news agency MTI.

Mihály Varga speaks to the press about the 2017 budget bill at Parliament yesterday. (Photo: MTI/Tamás Kovács)

The deficit is well over the HUF 761.6 billion gap targeted for 2016. 

The 2017 budget bill targets revenue of HUF 17.375 tln and expenditures of HUF 18.541 tln.

As announced earlier by the government, the budget is separated into three pillars: revenue and spending for the day-to-day operations of the state, as well as for investments funded by the state and by the European Union.

Revenue and expenditures for the operation of the state both balance out at HUF 14.680 tln.

The pillar for state-funded investments shows revenue of HUF 1.132 tln and expenditures of HUF 1.604 tln, with a HUF 472.4 bln deficit.

The pillar for EU-funded investments shows revenue of HUF 1.545 tln and expenditures of HUF 2.239 tln, with a deficit of HUF 694 bln.

Revenue from VAT is set to reach HUF 3.531 tln, over the HUF 3.352 tln targeted in this yearʼs budget.

The government recently announced plans to reduce from next year the VAT rates on milk, eggs and poultry from 27% to 5% and the rates for internet service and catering to 18%.

The government classifies HUF 2.497 tln of next yearʼs VAT as operating revenue and HUF 1.035 tln as revenue related to investments.

Revenue from corporate tax is set to reach HUF 734.7 bln, well over the HUF 400.5 bln targeted for 2016.

Revenue from personal income tax is targeted at HUF 1.787 tln, compared to HUF 1.658 tln in 2016.

Revenue from the bank levy is set to fall to HUF 66.5 bln next year from HUF 79.2 bln in 2016.

The government is reducing the levy in keeping with an agreement reached with the Hungarian Banking Association and the EBRD early last year.

The budget chapter on revenue and expenditures of state assets shows spending of HUF 27 bln by National Asset Management Agency (NET), established to buy homes on which lenders have foreclosed and allow borrowers to continue to reside in them as tenants.

A further HUF 18.5 bln is allocated for real estate investments and purchases and HUF 12.7 bln for acquisition of equity and capital raises by the National Asset Management Company (MNV).

The budget allocates HUF 9 bln for investments for the 2017 FINA World Aquatics Championships, which Budapest will host.

The stateʼs revenue from dividends is projected at HUF 33.6 bln.

Revenue from the sale of real estate by the National Land Fund is set to reach HUF 5.5 bln, all of which is classified as investment.

The budget bill targets HUF 298.6 bln for the Start fostered work program, down from HUF 340 bln in the 2016 budget.

Varga said on Tuesday that the government would introduce a new legal institution to support the move of fostered workers into the private sector.

The budget targets HUF 170 bln in reserves, including HUF 60 bln in the National Protection Fund and HUF 110 bln for “extraordinary government measures”.

It targets HUF 180.6 bln for the introduction of a career-path model and measures affecting salaries for some branches of the public sector.

Just under HUF 100 bln has been allocated for a capital raise at the project company for the upgrade of the Paks nuclear power plant.

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