Hungary’s cash-based general government budget, excluding municipalities, posted a HUF 851.2bn (EUR 2.84bn) deficit in the first seven months of 2013, accounting for 96.7% of the annual target, preliminary data from the finance ministry showed. The gap widened by 94.6% from a year earlier as expenditures grew by 10.6% y/y, faster than the revenues’ annual rise of 6.1%.

The central government budget generated a deficit of HUF 1.09tn in January to July 2013, surging by 101.5% y/y. Spending grew by 14.6% y/y and revenues were up 5.4% y/y. Social security funds had a surplus of HUF 180bn in the period, up from HUF 19bn a year earlier. The surplus on the extrabudgetary accounts reached HUF 62.1bn, down 27.8% y/y.

Hungary’s general government sector ran a deficit of HUF 532.6bn in 2012, equalling to 1.9% of the GDP, according to preliminary figures reported by the statistics office to Eurostat under the Excessive Deficit Procedure (EDP). The government targets an ESA95 deficit of 2.7% of GDP in 2013.

The Council of EU finance ministers (Ecofin) backed on June 21 a proposal of the European Commission to lift the excessive deficit procedure against Hungary, which was initiated in 2004 after the country joined the EU. The Commission made its recommendation on May 29, concluding that the country has taken adequate adjustment measures to keep the fiscal deficit below the 3% threshold in both 2013 and 2014.