Hungary’s budget deficit reaches EUR 3.04bn at end-May

Hungary’s cash flow-based budget, excluding local councils, ran a deficit of 1,051.5 billion forints (EUR 3.04bn) at the end of May on the back of epidemic response spending, a second reading from the Finance Ministry on Monday showed.

The ministry noted that the government had taken decisions on 590 billion forints’ worth of procurements related to the Covid-19 pandemic by the end of May and 450 billion forints of that amount had already been paid.

“The government — in the course of pandemic preparedness, just as under the state of emergency — will ensure all necessary resources for defence,” the ministry said.

The ministry noted that pre-financing for European Union-funded investments continued to impact the budget balance. While expenditures related to such investments reached 967.6 billion forints by the end of May, transfers from Brussels came to just 486.7 billion forints.

Hungary has long pre-financed EU-supported projects to avoid any backups at the end of funding periods. The practice affects the cash flow-based budget balance but not the accrual-based ESA balance.

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The ministry said expenditures were also raised during the period by 55.8 billion forints in spending for maintaining roads, 26.3 billion forints for road renovations, 53.0 billion for upgrading roads in villages, 29.1 billion for investments made in the framework of the Modern Cities Programme and 24.4 billion forints for investment incentives for businesses. Spending on subsidies for purchases of big passenger cars for large families reached 22.6 billion forints.

The central budget ran a 910 billion forint deficit at the end of May, the social insurance funds were 154.3 billion forints in the red and the separate state funds had a surplus of 12.8 billion forints.

In the month of May alone, the central budget’s deficit was 324.1 billion forints compared with a 137.4 billion forint deficit in May 2019.

The ministry said

the ESA deficit target of 3.8 percent of GDP remains achievable.

Total revenue in January-May was at 9,040 billion forints, up from 9,428 billion forints in the same period last year. Total expenditures meanwhile rose to 10,092 billion forints from 8,604 billion forints.

In the first five months of the year, revenue from the corporate tax was up 28.7 billion at 157 billion forints. VAT revenue was down 106.3 billion at 1,638 billion forints. Excise tax revenue rose by 2.1 billion to 449.1 billion forints. Personal income tax revenue was up 66.7 billion at 1,051 billion forints.

Source: MTI