Hungary’s budget deficit finished 2015 at around 2% of economic output, Economy Minister Mihaly Varga announced on January 6.
The reading is well below the target of 2.4%, and also the 2.5% deficit the country reported in 2014. The positive result reflects higher tax revenues generated by the expanding economy. The minister estimates Hungary’s economy grew by some 2.8%-2.9% last year. However, that is a slowdown from the 3.7% growth seen in 2014, and expectation is rife that 2016 will continue that trend.
Detailed figures on the budget deficit will be published later this year, state secretary Peter Banai said. He noted that the nominal budget gap is likely to be HUF400bn (€1.3bn), or around half the original target of HUF892bn, once adjusted for EU funds Hungary did not receive.
Along with trimming the budget deficit, the government also succeeded in reducing the debt-to-GDP ratio, Varga claimed. He estimates the end-2015 ratio dropping to below 76% from 76.2%, where it sat at the end of 2014.
Dropping the state debt is vital for Budapest, which has been flirting with breaking debt rules of the EU's excessive deficit procedure. Hungary is also desperate to restore its investment grade sovereign rating. Alongside high state debt, the issues surrounding policymaking and the banks have helped persuade the rating agencies to keep Hungary in junk status since 2011.
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