Budapest, October 10 (MTI) – The government decided to cut Hungary’s deficit target, calculated according to EU accounting rules, to 1.7 percent of GDP from 2 percent in light of better than projected performance so far this year, the economy ministry announced in its nine-month budget report on Monday.
The nine-month cashflow-based budget deficit, excluding local councils, stood at 2.4 billion forints (EUR 7.9m), the ministry said in a first reading. The deficit compares to a 761.6 billion forint full-year target.
The nine-month deficit was the lowest in one and a half decades and compares with a deficit of 954.6 billion forints one year earlier. In September alone, the budget showed a surplus of 271.6 billion forints, as against a deficit of 39.7 billion forints a year earlier.
Explaining the big shift, the ministry said that this year the European Union transferred to the central budget the big payouts the latter made to successful applicants in 2015 before the end of disbursement of funding for the 2007-2013 EU budgetary period. Further, the budget’s position has been “extraordinarily stable” due to higher revenues and lower expenditures this year, it added.
The central budget posted a 95.5 billion forint deficit in January-September this year, while the social insurance funds and separate state funds had surpluses of 21.3 billion forints and 71.8 billion forints, respectively.
The ministry said that the stable budget position was one of the main reasons for Hungary’s recent upgrade back to investment grade category by international ratings agencies Fitch Ratings and Standard & Poor’s. The government has cut the deficit goal in the light of the favourable budget and good macroeconomic performance, noting that it already forecast the 2016 ESA-conform deficit at 1.7 percent of GDP in its excessive deficit procedure report sent to the European Commission at the end of September.