Hungarian government plans refined as budget figures shift 🔄

MTI-ECONEWS – The government targets a general government deficit, relative to GDP, of 4.1pc for 2025 and 3.7pc for 2026, a state secretary at the National Economy Ministry said at a press conference on Tuesday. Here are the changes to the budget figures:

The improving condition of the economy paves the way for strict fiscal policy and a reduction in the deficit, Kornél Kisgergely said. He added that a reduction in Hungary’s state debt levels would continue in the coming years as the primary deficit, which excludes debt maintenance costs, remained close to zero. He noted that credit rating agencies had acknowledged the results Hungary had achieved while the European Commission had established that the country had fulfilled its commitments.

Kisgergely said macroeconomic trends had produced a minor deviation in the budget: GDP growth is expected to be under 2.5pc, compared to the earlier projected 3.4pc. Hungary’s cash flow-based general government deficit is expected to reach HUF 4,774bn now, compared to the HUF 4,123bn gap in the budget act, as the result of a tax revenue shortfall, wider application of family support measures, overspending for some items, delays in the transfer of European Union funding and freezes on some expenditure items, he said. The delay in getting EU funding will not impact Hungary’s general government deficit calculated according to the EU’s accrual-based accounting rules, he added.

Changes to the budget figures

Mihály Hoffmann, the CEO of the Government Debt Management Agency (ÁKK), said the agency’s financing plan had been modified to accommodate the bigger cash flowed-based deficit. At present, the financing plan relies on net institutional forint issues for 50pc of financing, institutional FX issues for 30pc and household purchases of retail securities for 20pc, he explained.

He said a decision had been taken to raise ÁKK’s net FX issues from HUF 838bn to HUF 1,685bn. That calculates as gross EUR 3.2bn and net EUR 2.2bn of FX issues, he added.

FX issues are the “optimal financing instrument” at present, he said, adding that the higher FX proceeds would relieve pressure on the forint market to meet the need for additional resources. The modification will lift FX financing to 30.2pc of state debt, a fraction over the 30pc target threshold, he said. No changes are planned on the market for retail securities, he added.