Hungary’s 2013 budget deficit at 82.6% of annual target.

By bne IntelliNews January 6, 2014

Hungary’s cash-based general government budget, excluding municipalities, posted a HUF 929.2bn (EUR 3.11bn) deficit in 2013, accounting for 82.6% of the revised annual target, the economy ministry informed.

Hungary raised on December 4 the cash-based deficit target by HUF 74.4bn to HUF 1,125bn, which was related to higher spending on the integration of the country's savings cooperatives and a repayment to oil and gas company MOL.

The ministry expects the accrual-based deficit, calculated under the ESA 95, not to exceed 2.7% of GDP, in line with the target, and at best scenario it might be as low as 2.3% of GDP. The final outcome would depend on Eurostat decision on the accounting of the budget transfer supporting the savings cooperative integration, which is expected in March.

According to economy minister Mihaly Varga, budget expenditures had been broadly in line with the plan and all extraordinary expenditures have been covered from surplus revenue.

Meanwhile, data published by the statistics office showed that Hungary’s general government deficit stood at HUF 555.6bn in January to September, or 2.5% of GDP. The gap was 0.7% higher compared to the same period a year earlier with expenditures rising faster (7.3% y/y) than revenues (5.9% y/y).

Among expenditure items, government’s public investment rose by a strong 24.9% y/y, interests payment advanced by 6.8% y/y and the compensation of employees increased by 5.3% y/y. In addition, the social benefits, other than social transfers in kind and intermediate consumption increased by 3.6% y/y and 8.9% y/y, respectively.

The growth in revenues was primary due to a 4.7% y/y rise in revenues from indirect taxes, within which VAT payments grew by 2.8% y/y. Revenues from taxes on income were up by 6.7% on the year and social contributions advanced by 3.6% y/y as well.

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