Budget bill details risks considered in National Protection Fund reserves

Budapest, April 27 (MTI) – The 60 billion forint (EUR 192.3m) reserves to be set aside in the National Protection Fund next year are sufficient to cover a 60 basis-point rise in yields or the tax revenue shortfall if economic growth is 0.4-0.5 percentage-points slower than projected, an explanation in the 2017 budget bill shows.

The budget bill, submitted and published on parliament’s website on Tuesday, is based on 3.1 percent GDP growth and a further drop in forint interest rates.

The government explained the type and volume of risks it took into account when planning the budget reserves at the request of the Fiscal Council. The government reshuffled reserves compared to an earlier budget draft also at the recommendation of the Fiscal Council, the bill said. It raised the National Protection Fund by 10 billion forints to 60 billion forints and cut the appropriation of the reserves set aside for “extraordinary government measures” — the general budget reserves — by 10 billion forints to 110 billion forints. The aim was to reduce the risk of a deficit overshoot, the bill said.

The budget bill also shows that Hungary’s structural deficit would drop to the country’s mid-term objective of 1.7 percent of gross domestic product (GDP) only in 2018, as opposed to 2017, as contained in Hungary’s euro convergence programme, the bill said. The convergence plan was last updated in spring of 2015. The 2.4 percent of GDP deficit target based on EU accounting rules set in the budget bill corresponds to a structural deficit of 2.1 percent of GDP according to the government’s calculations, the bill said. The structural deficit excludes cyclical factors, one-offs and temporary measures.

Source: http://mtva.hu/hu/hungary-matters