Hungary’s economy minister: The year was closed with stable public finances

Thanks to the Government’s tax reductions and a successful fiscal policy, the deficit of the general government budget was low in 2016 and the government debt-GDP ratio could also be substantially reduced, Minister for National Economy Mihály Varga said at a press conference. Speaking of headline figures, Mihály Varga said that the central sub sector of the state budget accumulated a preliminary deficit of HUF 848.3bn, down by HUF 389bn compared to the year 2015.

Within that, the deficit of the central budget, Social Security Funds and Extra-Budgetary State Funds was HUF 771.6bn, HUF 75.2bn and HUF 1.5bn, respectively, at the end of 2016. In 2015, the central sub sector recorded a shortfall of HUF 1237.2bn.

Compared to the previous year, data from 2016 are better due to some favourable trends, the Minister stated. The main positive factor was that – thanks to economic performance and Government measures – tax revenues rose by HUF 490bn. More and more people are economically active and wages increased in both the private and public sectors, he added. For example, despite the 1 percentage point reduction in the rate of personal income tax and the increase of family tax allowances, labour-related tax revenues rose by HUF 262bn.

Payments by enterprises were also higher. On the expenditure side, on the other hand, the cyclicality of the inflow of EU funds had a major impact on the budget last year, as these were HUF 700bn lower than in 2015, which was the closing year of the programming period 2007-2013.

The National Assembly adopted the 2016 Budget already in spring 2015, and this has increased predictability and calculability, he stressed. The 2016 Budget was modified only once, in April 2016, to gain extra resources for education purposes, housing programmes and infrastructural development, the Minister noted. At year-end, there was more manouvering room in the budget that allowed the disbursement of extra funding for several fields without jeopardizing the full-year stability of public finances.

Hungarian news agency MTI said, commenting on the data, István Hollik, a lawmaker of the co-ruling Christian Democrats, said Hungary was getting stronger compared to how “financially weak” the country had become under the Socialist-led governments of 2002-2010. In government, the left had been “incompetent and corrupt” and had led Hungary to “the brink of bankruptcy”, doubling public debt. The left-liberal governments were never able to keep the budget deficit under 3 percent, which led to austerity measures, tax increases and frozen wages each year, Hollik insisted.

Photo: MTI

Source: Ministry for National Economy