Budget deficit at 102.5 pc of full-year target, says ministry

Budapest (MTI) – Hungary’s cash flow-based public-finance deficit, excluding local councils, came to 914.9 billion forints (EUR 2.9bn) at the end of August, or 102.5 percent of the 892.4 billion forint full-year target, the economy ministry said in a first reading of data.

The deficit was up from 858.8 billion forints for the same period a year earlier, a difference the ministry attributed to a 370 billion forint decline in European Union funding. The ministry noted that, in addition to the usual year-to-year differences in accounting the funding, the transfer of some funding had been held up because of a European Commission probe.

The EC interrupted the equivalent of 451 million euros in payments for Hungarian projects a year ago, after an audit “revealed systemic weaknesses in the project selection system”. The funding was suspended in April of this year.

The ministry said in its release on Monday that the suspended funding would show up later on the general government’s cashflow-based accounting, but would not affect the balance calculated according to the EU’s accrual-based rules.

The full-year deficit target of 2.4 percent of GDP, calculated with EU rules, remains achievable, the ministry said.

In January-August, the central budget ran a 980.2 billion forint deficit, while the social security funds and separate state funds had surpluses of 33.7 billion forints and 31.6 billion forints, respectively.

In August alone, the general government deficit came to 20.8 billion forints, over the 7.4 billion forint gap in the base period because of the early transfer of 34.5 billion forints of social subsidies for the month of September with the aim of making the start of the school year easier for Hungarian families, the ministry said.

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