Pre-financing for EU projects lifts Aug deficit to 121 pc / FY target

Hungary’s cash-flow-based budget, excluding local councils, ran a 1,646.2 billion forint deficit at the end of August, the Finance Ministry said in a preliminary release on Friday.

Alone in the month of August, the budget shortfall came to 155.3 billion forints.

For the period to the end of August, the deficit came to 121 percent of the 1,360.7 billion full-year target.

The full-year deficit target of 2.4 percent of GDP, calculated using EU accrual-based accounting rules, is “realistic” and “achievable” parallel with economic growth above 4 percent, the ministry said.

It noted that

pre-financing for EU-funded projects reached 1,388.5 billion forints by the end of August, while transfers from Brussels came to just 183 billion.

Expenditures were also lifted by spending on fully central budget-funded projects, such as the Modern Cities and Healthy Budapest schemes, as well as road renovations and support for corporate investments. A combined 30.7 billion forints of family subsidies for September were paid early, in August, to help out with households’ back-to-school expenses, the ministry added.

Revenue from VAT in January-August was up 169.3 billion forints from the same period a year earlier, while revenue from personal income tax climbed 170.4 billion and revenue from payroll taxes increased by 187.6 billion.

The ministry attributed the improvements to the shrinking shadow economy, stronger economic growth, expanding employment and a dynamic increase in wages.

Within the general government, the central budget ran a 1,708 billion forints deficit at the end of August, while separate state funds and the social insurance funds had surpluses of 21.8 billion and 40 billion, respectively.

(HUF 100 = EUR 0.3055)

Source: MTI