Hungarian budget has collapsed in two months, the deficit is already huge

The finance ministry confirmed in a detailed data release on Monday that Hungary’s cash flow-based budget deficit reached 1,704 billion forints (EUR 4.3bn) at the end of February.

At the end of the month, the central budget had a deficit of 1,759.5 billion forints, social security funds were 23.5 billion in the red, and separate state funds were 79 billion in the black.

The budget had a 54.4 billion forint surplus in January.

The ministry noted that revenue in February was “several hundred billion” forints lower than average because of VAT seasonality.

It said that the fiscal impact of pension payments, including an annual bonus equivalent to a full month’s pension, had reached 1,041 billion forints in February, bringing pension payments for January-February to 1,420.7 billion.

The ministry added that Interest expenditures, including large payments on retail government securities, came to 855.4 billion forints.

The ministry said that in addition to covering extraordinary expenditures, Hungary’s budget has ensured the resources for protecting pensions and family subsidies and maintaining regulated household utility prices.

It added, “The government’s most important aim is to reduce the deficit and state debt gradually.”

The ministry said the government targets a deficit of 4.5 percent of GDP in 2024, 3.7 percent in 2025, and 2.9 percent in 2026.

The full-year deficit target in the 2024 Budget Act is 2,514.8 billion forints. Finance Minister Mihály Varga said a week earlier that the government was drafting amendments to the act.

As we wrote earlier, the Hungarian National Bank will decide the forint’s fate this Tuesday. A plummet may follow; details are HERE.

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