Hungary’s cash flow-based budget, excluding local councils, ran a 1,646.2 billion forint (EUR 5.1bn) deficit at the end of August, the Finance Ministry confirmed in a second reading of data released Monday.

The deficit reached 121 percent of the 1,360.7 billion forint full-year target.

The central budget deficit reached 1,708 billion forints while separate state funds had a 21.8 billion forints surplus and social insurance funds a 40 billion forint surplus.

In August alone, the budget deficit came to 155.3 billion forints.

The ministry noted that pre-financing for EU-funded projects reached 1,388.5 billion forints by the end of August, while transfers from Brussels came to just 183 billion. Expenditures were also lifted by spending on fully central budget-funded projects, such as the Modern Cities Programme, the Healthy Budapest Programme, as well as road renovations and support for corporate investments.

A combined 30.7 billion forints of family subsidies for September were paid early, in August, to help out with households’ back-to-school expenses, the ministry added.

Revenue from VAT in January-August was up 169.3 billion forints from the same period a year earlier, while revenue from personal income tax climbed 170.4 billion and revenue from payroll taxes increased 187.6 billion.

The ministry attributed the improvements to the shrinking shadow economy, stronger economic growth, expanding employment and a dynamic increase in wages.

The 2.4 percent-of-GDP deficit target for the full year, calculated using EU accrual-based accounting rules, is “realistic” and “achievable” parallel with economic growth over 4 percent, the ministry said.

Total revenue for the first eight months of 2018 was 12,141 billion forints and expenditure was 13,787 billion forints compared to 11,616 billion forints and 12,596 billion forints respectively for the same period in 2017.

Corporate tax income in January-August was 117.8 billion forints, down by 211.2 billion compared to the first eight months of 2017, because of carry-on effects of tax advance supplement provisions from last year and reduced revenues from the growth tax credit.

Income from excise tax at 702.2 billion forints in January-August was up by around 55.5 billion forints compared to the same period last year.

Income from the financial transaction duty was up 11 billion forints at 154 billion and income from the extraordinary bank levy was 26.17 billion forints.

Source: MTI