Varga: budget deficit expected at 2pc of GDP for 2015 – UPDATE
Budapest, January 6 (MTI) – Hungary expects to post a budget deficit of 1,218 billion forints (EUR 3.86bn) or 2 percent of gross domestic product (GDP) for 2015, Economy Minister Mihaly Varga said on Wednesday.
The government had targeted a deficit of 2.4 percent of GDP.
Hungary’s economy grew by 2.8-2.9 percent last year and inflation was around zero percent, Varga told a press conference. He said public debt would fall below 76 percent, citing preliminary data.
EU transfers from Brussels to Hungary have been late with about 600 billion forints worth of EU funding still outstanding, the minister said.
Higher than expected economic growth last year had led to tax revenues coming in at 550 billion forints over the target, Varga said. Gross wages grew by 6.7 percent and consumer consumption also increased by 3.1 percent last year, he added. Improvements in employment data also contributed to the favourable deficit figure, Varga said.
The structure of economic growth has become more favourable in 2015 than before when industry and exports were driving it, Varga said. Now wages, employment and rising consumption are also propping up growth, he said.
The foreign trade surplus is expected to come in at around 8 billion euros in 2015 and steadily low oil prices also helped growth.
Addressing the same press conference, Beno Peter Banai, the state secretary in charge of the budget, said Hungary had drawn down 2,800 billion forints of EU funding last year, 286 billion forints more than planned.
The balance of interest payments improved by 56 billion forints despite the fact that debt had been taken over from public transport company BKV (52.3 billion), railways MAV (20 billion) and public-service media MTVA (47 billion), he said.
Missing EU subsidies that are still expected to flow into the budget mean that the deficit will be down to 400 billion forints, a half of the original target, Banai said.
He said Hungary’s spending on measures related to the migrant crisis totalled 83.9 billion forints last year, but this did not compromise financial stability. He added that the budget was stable despite the fact that the government had already brought forward spending from 2016, such as a capital rise of more than 30 billion forints at Eximbank.
Final budget deficit figures will be released in the spring when the Central Statistical Office (KSH) publishes detailed GDP data (on March 8), Banai said.
Varga said plans are to have the 2017 budget bill ready for submission to parliament by the spring this year, too, together with tax bills for next year.
In a scheduled release later in the day, the economy ministry said the 2015 cashflow-based budget deficit, excluding local councils, was 1,218.6 billion forints, or 136.6 percent of the target. The central budget deficit came to 1,195.9 billion forints and the social insurance funds were 24.9 billion forints in the red, but the separate state funds had a surplus of 2.2 billion forints.
In December, the public finance deficit came to 247.8 billion forints.
The ministry noted the impact of the suspended EU funding on the budget and reiterated that the shortfall would not affect the accrual-based deficit.
The ministry said tax revenue was up by 848 billion forints from 2014, thanks to economic growth and a government crackdown on tax evasion. Expenditures were 251 billion forints higher.