Hungary’s budget is in trouble: less income, more expenditure, state unable to save money

The Orbán government, having a supermajority, regularly accepts Hungary’s annual budget the year before. After the COVID pandemic broke out, the parliament had to rewrite most of the budget numbers because the state always spent more than calculated in the previous year.

According to 444.hu, that is what happened this time, as well. The parliament accepted the 2023 budget in May 2022 when we knew nothing about this year’s challenges. That is why Hungary reached only 71 percent of the calculated income. Meanwhile, the increase rate of expenditures compared to last year is almost 20% even though the law calculated only 15%.

The core of the problem is that the Hungarian state did not get enough revenues from the VAT because people consume less due to the economic crisis. Meanwhile, the state must pay more on state bond interest. The state cannot save money.

Hungary’s cash-flow budget deficit narrowed

Hungary’s cash-flow budget deficit narrowed to 3,264.9 billion forints at the end of September, posting a surplus of 33.7 billion in the single month, the Finance Ministry confirmed in a detailed release of data on Friday. The central budget posted a shortfall of 3,266 billion forints at the end of September, with social security funds 135.7 billion in the red and separate state funds 136.7 billion in surplus.

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The ministry said in a statement that the budget would ensure the value of pensions was preserved and household energy subsidies and family benefits maintained. At the same time, it said the government was committed to reducing the deficit as well as cutting the public debt from year to year.

Household energy subsidies cost the treasury 1,105.6 billion by the end of September, it noted. Government spending related to programmes financed by the European Union came to 1,992 billion in Jan-Sept, while EU transfers were worth 1,159.9 billion.

Budget revenue was below target due to a temporary drop in consumption, the statement said. The full-year deficit target is 3,400.2 billion forints. The deficit reached 4,753.4 billion in 2022.