Hungary aims to reduce deficit with new fiscal measures, reports finance ministry

In a detailed report on the general government balance released on Monday, the Finance Ministry said the government remained committed to improving balance indicators.

The ministry noted that measures taken in the spring had improved the fiscal room for manoeuvre by over HUF 1,000bn (EUR 2.53bn) and pointed to monthly budget surpluses on two occasions since. The ministry acknowledged the impact of seasonal trends on the August balance and said the scale of the deficit would return to a downward path afterward.

“The government is following closely the development of fiscal indicators and will take further measures to achieve the deficit target if necessary,” it added.

The preliminary report shows that Hungary’s cash flow-based general government deficit widened to HUF 2,857.7bn (EUR 7.24bn) at the end of August. The central budget had a deficit of HUF 2,862.1bn at the end of the month, and the social security funds were HUF 168.4bn in the red, but separate state funds were HUF 172.8bn in the black.

The ministry said the HUF 414.3bn (EUR 1.05bn) deficit for the month of August alone was affected by the seasonality of tax revenue, especially from VAT. At the same time, monthly payouts of family support were doubled, while spending on roads and public transportation also rose from the same period a year earlier, it added.

Interest expenditures in the year to the end of August reached HUF 2,413.8bn, HUF 695.5bn more than in the base period.

Central budget payouts for European Union-funded projects came to HUF 1,086.3bn during the period, while transfers from Brussels reached just HUF 673.8bn.

“The government is committed to reducing the deficit and state debt levels,” the ministry said, affirming general government deficit targets, relative to GDP, of 4.5pc for 2024, 3.7pc for 2025 and under 3pc for 2026.