Budapest, March 31 (MTI) – The European Commission’s assessment of the fiscal policies of European Union members confirms the ministry’s forecast that the budget deficit last year was 1.7 percent of GDP, according to EU accounting rules, while the public debt dropped to 74.1 percent of GDP, Economy Minister Mihály Varga said on Friday.

The cash flow-based budget deficit was 2.4 percent of GDP, he told a press conference.

The rate of redistribution decreased and the state operated frugally, which is good for market players as well as taxpayers, Varga said. Spending was again lowered and ministries spent less than their allocations, he added.

At the same time, revenues were up, Varga said. Thanks to an increase in employment and the number of jobs revenues from contribution payments rose by 0.6 percent and income tax revenues were 0.5 percent up, which improved the position of the budget. The balance was also helped by revenues from the tax credit for growth scheme and land auctions, Varga said.

Hungary’s accrual-based deficit was in line with the EU average which was also 1.7 percent. The deficit was above this average in Romania (3.6 percent), Spain (3.5 percent) and France and Poland (2.9 percent), he added.

He said the sustainable balance will also be preserved for 2017. The results of a six-year wage increase and tax reduction agreement will be already felt this year. He noted that that the corporate tax has been reduced from 19 percent to 9 percent while employers’ contribution payments were reduced from 27 percent to 22 percent, which greatly reduced burdens on companies. The minimum wage for skilled and unskilled workers has been increased by 15 and 25 percent, respectively, this year and by 8 percent and 12 percent next year.

Varga said all the above shows that Hungary’s budget and the country’s economy are on the right track, the targets have been met and are expected to be met again this year.

Responding to a question, the minister said bringing forward the pension adjustment — which would possibly mean extra money for retirees based on an assessment of inflation — from November would not be justified. Only after the first six months are over can inflation data be assessed, he said. Pensioners will not lose out because any difference will be repaid to them with compound interest, he said. In recent years, actual inflation was below projections, and the pensioners benefited from this, he added.

In connection with an amendment proposal to the advertisement tax submitted to parliament, he said a total of 20 billion forints (EUR 65m) will be refunded and the greatest winner of this move will be RTL, which will get 4 billion forints back. He confirmed that no new taxes are planned.

Source: MTI