Budget posts 580 million euros surplus at end-February

Budapest, March 7 (MTI) – Hungary’s cash-flow-based budget, excluding local councils, had a 180.4 billion forint surplus at the end of February, according to preliminary data released by the Economy Ministry on Tuesday.

In February alone, the budget posted a 57 billion forint surplus.

Higher revenues, especially from VAT and personal income tax, played a decisive role in the improved balance compared to the same period a year earlier, the ministry said. These revenues are supported by favourable economic trends, a crackdown on tax evasion and the impact of labour policy measures, such as a big minimum wage rise, it added.

The ministry noted that revenue from state-owned assets was higher and the government had recouped pre-financing for European Union-funded projects. It added that domestic financing for projects supported by monies from the 2014-2020 EU funding cycle had also impacted the general government balance.

The deficit target of 2.4 percent of GDP for 2017, calculated according to EU accounting rules, is “realistic” and “can be safely achieved”, the ministry said.

The 2017 budget act targets a full-year deficit of 1,166.4 billion forints.

Commenting on the February public finance figures, Economy Minister Mihály Varga said VAT revenues in the first two months this year were strong thanks to earlier government measures to whiten the economy. Moreover, the effects of last autumn’s wage deal can already be felt and promising trends can be seen due to targeted tax breaks for employers. He added, however, that some higher VAT refunds could be expected in March.

In response to a question, he welcomed the approval by Brussels of the Paks expansion project. The government has allocated 99.7 billion forints (EUR 325m) for the preparation of the project in this year’s budget. If more money is needed, the government will pay for that from reserves. The majority of the costs this year will be financed from domestic sources, he said.

Source: MTI