The two major indicators of Hungary’s public finances have turned out to be much more favourable than they had been predicted by the previous so-called EDP report in spring 2016: the deficit of the central government budget is 1.6 percent of GDP and the government debt-to-GDP ratio is 74.7 percent. The latest data also show dynamic economic growth: full-year GDP growth was revised upward to 4 percent in 2014 and 3.1 percent in 2015.

In accordance with EU regulations, EU member states submit two reports each year, one in autumn and one in spring, of changes regarding compliance with convergence criteria, such as the deficit of the government sector and state debt. During the notification process, national statistics authorities are to submit data to the Eurostat compiled and analysed in line with a uniform methodology (ESA).  State debt and budget deficit figures were published by the Hungarian Central Statistical Office (KSH) earlier today, while the entire EDP report is scheduled to be published next week.

It is well known that the Government has been committed to maintaining fiscal stability and gradually reducing general government debt, as this is the only way to secure the long-term competitiveness and the dynamic economic expansion of the country. In recent years, the state budget posted improving deficit figures. Predictable and prudent fiscal management can safeguard the improving standards of living of Hungarian families, the development of enterprises and – through tax incentives and subsidies -- job and economic growth.

Following the change of government in 2010, thanks to the fiscal consolidation process, which was among the most far-reaching ones within the European Union, the deficit of the general government sector has been well below 3 percent of GDP for years and the European Commission lifted the excessive deficit procedure, which had been in place for a decade. Concurrently, the steadily rising state debt trend could be reversed and the country’s exposure to external risks could thus be reduced. The achievements of this policy have been recently recognized by various international financial and credit rating institutions.

(Ministry for National Economy)