Hungary’s general government budget deficit, under the accrual-based ESA95 methodology, narrowed by 10.9% y/y to HUF 256.6bn (EUR 824.6mn) in the first quarter of 2014, accounting for 3.6% of the quarterly, seasonally adjusted GDP, the statistics office said. The higher gap came as revenues grew by 9% y/y, faster than expenditures that advanced by 7.1% y/y.
Government spending on intermediate consumption and compensation of employees increased by 14.8% y/y and 6.1% y/y, respectively. Gross fixed capital formation surged by 42.7% y/y, which was mainly due to investments in road and rail infrastructure. Social benefits, other than social transfers in kind, increased by 1.6% as well. Other expenditure increased by 10.9% y/y. On the other hand, interests payments edged down by 0.9% y/y in Q1.
On the revenues side, current taxes on income and wealth, which broadly refer to personal and corporate income taxation, were up 7.9% y/y. Revenues from taxes on production and imports, rose by 9.9% y/y. Within this receipts from VAT advanced by 14.7% on the year, which could be attributed to the strengthening of domestic consumption. Social contributions went up by 9.5% y/y.
Hungary's general government sector ran a deficit of HUF 687.6bn (EUR 2.2bn) in 2013, accounting for 2.4% of the GDP. The government targets an ESA95 deficit of 2.9% of GDP in 2014.
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