Thanks to Government measures, the favourable trend in public finances have continued: the central sub sector closed the month of April with a surplus of HUF 76.6bn, thus the sector’s accumulated deficit totalled HUF 121.5bn in the period January-April 2017.

Within the deficit in the period January-April 2017, the central budget and the Social Security Funds had deficits of HUF 100.3bn and HUF 61.1bn, respectively, while Extra Budgetary State Funds posted a surplus of HUF 39.9bn. In the same period of 2016, the central sector showed a deficit of HUF 144.9bn.

The difference between the deficits of these two periods resulted from higher fiscal revenues in April 2017, especially from VAT. Indisputably, the growth is contributable to the six-year wage agreement of November 2016, under which the minimum wage and the guaranteed minimum wage (for skilled workers) rose by 15 percent and 25 percent, respectively, and which helped boost wages in higher income brackets, too. These have showed not only in employment-related taxes (personal income tax, pensions, health-care and labour market contributions) but also in consumption growth, as disposable income has risen at families. In addition, the Government’s pro-transparency measures, the delayed payment of EU funds allocated for Hungary and one-off factors (e.g. revenues from agricultural land sales) continued to drive revenue inflow. Compared to the corresponding period of the previous year, the expenditures related to EU funds of the programming period 2014-2020 of Chapter-Managed Appropriation Allocation Funds were higher. These funds are a main driver of Hungary’s economic progress.

Amendments to this year’s Budget, aiming to finance economic and social policy measures through fiscal resources while maintaining the key priorities of predictability and stability, have been submitted to the National Assembly. Accordingly, neither the cash-flow deficit nor the general government debt-to-GDP ratio is expected to rise. The annual fiscal deficit target of 2.4 percent is seen as safely attainable.

(Ministry for National Economy)